A machinery which cost Rs 200000 is depreciated at 25% per year using the written down Value Method. At the end of three years, Calculate the net book value of the machinery.
Answers
Given info : A machinery which cost Rs 200000 is depreciated at 25% per year using the written down Value Method.
To find : At the end of three years, the net book value of the machinery is ...
solution : when an object of price P is depreciated at r % per year then, price of object after n years is P(1 - r/100)ⁿ
here P = 2,00,000 , r = 25 % and n = 3
so, net book value of the machinery = 200000(1 - 25/100)³
= 200000 × (1 - 1/4)³
= 200000 × 27/64
= 84375
Therefore the at the end of three years, the net book value of the machinery is 84,375 Rs.
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