Question

A machinery which costs Rs. 2,00,000 is depreciated at 25% per yer using the Written Down Value metod . At the end of three years it will have a book value of *

1,50,000

84,375

1,12,500

1,00,000​

Answer 1

Answer:

1,50,000 is the answer

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Answer 2

GIVEN :  Cost of Mahinery = 2,00,000 ; depriciation is charged 25%  

TO FIND :  value of machinery at the end of three year

SOLUTION :

Depriciation is the normal wear and tear in the value of fixed asset . There are two methods of charging depreciation and in the question it is given that we need to follow written down value method , in this method we will charge depreciation on its depreciated value not on its original cost every year.

1st Year

Value of Machinery = 2,00,000

Depreciation = 2,00,000 ×$\frac{25}{100}$

                     = 50,000

So, the value of machinery after depreciation = 2,00,000 - 50,000

                                                                            = 1,50,000

2nd Year

Value of Machinery = 1,50,000

Depreciation = 1,50,000  × $\frac{25}{100}$

                        =  37,500

So, the value of machinery after depreciation = 1,50,000 - 37,500

                                                                            =  1,12,500

3rd Year

Value of Machinery = 1,12,500

Depreciation = 1,12,500  × $\frac{25}{100}$

                    =  28,125

So, the vlaue of machinery after depreciation in the third year

                                      = 1,12,500 - 28,125

                                       = 84,375

Option C is correct i.e. 84,375 , after three year the value of machinery will be 84,375.