Question

The useful life of a machine is estimated to be 10 years and cost 10.000. Rate of depreciation
is 10%
P.a.
The
scrap value at the end of its life is​

Answer 1

The useful life of a machine is estimated to be 10 years and cost 10,000. Rate of depreciation is 10% p.a. The scrap value at the end of its life is...? The correct answer is ₹3,486.78.

Using declining balance depreciation:

Declining Balance Depreciation Rate = 1 – (Salvage Value / Cost)^(1/Years)

Rearranging:

Salvage value = Cost x (1 - Depreciation rate)^Years

Salvage value = 10000 x (1 - 10%)^10 = 3,486.78

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