Question

a machine was purchased for Rs. 4000 and it was estimated that it will work for three years and at the end of its life its residual is Rs. 32.Find out the rate of depreciation if depreciation is calculated at diminishing balance method
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Answer 1

Answer:

According to question, it can be concluded that the required method of charging depreciation asked in the question is written down value method.

Formula of depreciation under WDV method is :

D = 1 – n√R/C

Where R = Rsidual value = Rs. 128

n = no. of years = 2 years

C = Cost of the asset = Rs. 200

D = 1 – 2√128/200

D = 1 - 2√0.64

D = 1 - 0.8 = 0.2

D = 0.2 or 20%