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.
Answers
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 :
★(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.