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A machine is depreciated at the rate of 20% on reducing balance. The original cost of the machine was rs100000 nd it's ultimate scrap value was 30000. The effective life of machine is??? (a)4.5 years (approx) (b)5.4 yrs (approx) (c) 5 years (approx) (d) none of the above Can anyone help in this ques from time value of money?? With explanation!!!?
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A machine is depreciated at the rate of 20% on reducing balance. The o...
Given Information:
- Original cost of the machine: Rs 100,000
- Scrap value of the machine: Rs 30,000
- Depreciation rate: 20% on reducing balance

Calculating Effective Life of the Machine:
1. Calculate the depreciation amount for the first year:
- Depreciation for the first year = 20% of Rs 100,000 = Rs 20,000
- Book value at the end of the first year = Rs 100,000 - Rs 20,000 = Rs 80,000
2. Calculate the depreciation amount for the second year:
- Depreciation for the second year = 20% of Rs 80,000 = Rs 16,000
- Book value at the end of the second year = Rs 80,000 - Rs 16,000 = Rs 64,000
3. Continue this process until the book value reaches the scrap value of Rs 30,000:
- Book value at the end of the third year = Rs 51,200
- Book value at the end of the fourth year = Rs 40,960
- Book value at the end of the fifth year = Rs 32,768
4. The effective life of the machine is the number of years it takes for the book value to reach the scrap value. In this case, it takes approximately 4.5 years for the book value to reach Rs 30,000.
Therefore, the effective life of the machine is approximately 4.5 years.

Final Answer: (a) 4.5 years (approx)
Community Answer
A machine is depreciated at the rate of 20% on reducing balance. The o...
Approx 5.4 yrs
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A machine is depreciated at the rate of 20% on reducing balance. The original cost of the machine was rs100000 nd it's ultimate scrap value was 30000. The effective life of machine is??? (a)4.5 years (approx) (b)5.4 yrs (approx) (c) 5 years (approx) (d) none of the above Can anyone help in this ques from time value of money?? With explanation!!!?
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A machine is depreciated at the rate of 20% on reducing balance. The original cost of the machine was rs100000 nd it's ultimate scrap value was 30000. The effective life of machine is??? (a)4.5 years (approx) (b)5.4 yrs (approx) (c) 5 years (approx) (d) none of the above Can anyone help in this ques from time value of money?? With explanation!!!? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A machine is depreciated at the rate of 20% on reducing balance. The original cost of the machine was rs100000 nd it's ultimate scrap value was 30000. The effective life of machine is??? (a)4.5 years (approx) (b)5.4 yrs (approx) (c) 5 years (approx) (d) none of the above Can anyone help in this ques from time value of money?? With explanation!!!? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A machine is depreciated at the rate of 20% on reducing balance. The original cost of the machine was rs100000 nd it's ultimate scrap value was 30000. The effective life of machine is??? (a)4.5 years (approx) (b)5.4 yrs (approx) (c) 5 years (approx) (d) none of the above Can anyone help in this ques from time value of money?? With explanation!!!?.
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