Question

The original cost of a fixed asset is Rs. 40,000. If the depreciation under
reducing balance method is 10% p.a., its w.D.V. after two years will be
a) Rs. 28,000
b)Rs. 29,160
c) Rs. 25,000
d) Rs. 32,400.
​

Answer 1

Answer:

Answer is (d) Rs.32,400

Explanation:

Depreciation during first year =40,000 X10/100

=4,000

Balance carried down in first year = 40,000-4,000

= 36,000

Balance brought down next year = 36,000

Since it is WDV method depreciation will be calculated on the basis of book value.

Depreciation = 36,000 x 10/100

= 3,600

Value after two years will be = 36,000 - 3,600

= 32,400

Answer 2

ANSWER :

★(d) Rs. 32,400

• ✎ The original cost of a fixed asset is Rs. 40,000. If the depreciation under reducing balance method is 10% p.a., its W.D.V. after two years will be Rs. 32,400.

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SOLUTION :

❒ Given :-

• Original cost of the fixed asset = Rs. 40,000

• Method of charging depreciation = Reducing Balance Method

• Rate of Depreciation = 10% p.a.

❒ To Calculate :-

• Written down value after two years = ?

❒ Calculation :-

• Original cost of the fixed asset = Rs. 40,000

Less : Depreciation @10% p.a. for the first year = Rs. 4,000

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• Written down value after one year = Rs. 36,000

Less : Depreciation @10% p.a. for the second year = Rs. 3,600

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• Wriiten down value after two year = Rs. 32,400

Thus,

• ✎ Written down value (w.d.v) of the fixed asset after two year will be Rs. 32,400.