Question

Question Xyz limited bought a van costing Rs. 120000 the company expected to fetch a scrap value of 25% cost price of the vehicles after 10 years. The vehicle were depreciated under original cost method. The rate of the rate of depreciation charged will be​

Answer 1

Answer:

7.5% p.a

Explanation:

See,

book value of van = 1,20,000/-

Scrap value = 25% of 1,20,000 = 30000/-

So total value get deprecated = 120000 - 30000= 90,000/-

Depreciation is under original cost method so value of depreciation is remain same for every year till gets deprecated

Estimated life of vehicles= 10 years

:. Depreciation = 90,000/10

= 9,000 per year

rate of depreciation = (9,000/120000) * 100

= 7.5 %