Question

Shri Ram paid 200 for a machine. At the end of 7th year it was valued at 95. Assuming the yearly depreciation
is a constant amount, find the annual depreciation.
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Answer 1

Answer:

According to question, it can be concluded that the required method of charging depreciation asked in the question is written down value method.

Formula of depreciation under WDV method is :

D = 1 – n√R/C

Where R = Rsidual value = Rs. 128

n = no. of years = 2 years

C = Cost of the asset = Rs. 200

D = 1 – 2√128/200

D = 1 - 2√0.64

D = 1 - 0.8 = 0.2

D = 0.2 or 20%