Question

An asset was purchased for Rs.80,000. Depreciation is provided @20% p.a. on reducing balance of asset. What will be the value of asset after three years? 
Rs.40,690
Rs.40,960
Rs.56,960
Rs.56,000​

Answer 1

Calculation of depreciation of asset of Rs. 20000 @ 10% per annum by reducing balance method:

Amount (Rs.)

Book value of asset in 1st year 20000

Less: Depreciation @ 10% (2000)

Written down Value of Asset in 2nd year 18000

Less: Depreciation @ 10% (1800)

Written down Value of Asset in 3rd year 16200

Depreciation @ 10% in 3rd year = Rs. (16200 * 10)/100 = Rs. 1620

Answer 2

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RS 56,000