an asset was purchased for Rupees 500000 and as per is reducing balance method 20% depreciation is charged each year what is the value of asset at the end of 3 years
Answers
Answer:
the value of the asset at the end of the year is 2,56,000
Answer:
Frankly speaking based on given data in the question, at the end of three years, the asset's value will be Rs. 256,000 due to its depreciation.
Explanation:
In accounting and finance, an asset refers to anything of value that is owned or controlled by a person, business, or organization and that can be converted into cash. Assets can be tangible, such as buildings, equipment, and inventory, or intangible, such as patents, trademarks, and goodwill.
On the other hand depreciation is the process of allocating the cost of a tangible asset over its useful life. It is an accounting method that spreads the cost of the asset over the years of its useful life, reflecting the fact that the asset loses value or becomes obsolete over time.
There are several methods of depreciation, including straight-line, declining balance, and sum-of-years digits. The choice of method depends on factors such as the asset's expected useful life, salvage value, and the rate of obsolescence.
According to the reducing balance method, the depreciation rate is applied to the asset's current value, not its original value. Therefore, we need to calculate the asset's value at the end of each year.
After the first year, the asset's value will be:
500000 - (20% * 500000) = 400000
After the second year, the asset's value will be:
400000 - (20% * 400000) = 320000
After the third year, the asset's value will be:
320000 - (20% * 320000) = 256000
Therefore, at the end of three years, the asset's value will be Rs. 256,000.
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