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Consider the following information:
I. Rate of depreciation under the written down method = 20%.
II. Original cost of the asset = Rs.1,00,000.
III. Residual value of the asset at the end of useful life = Rs.40,960.
II. Original cost of the asset = Rs.1,00,000.
III. Residual value of the asset at the end of useful life = Rs.40,960.
Q.Depreciation for 2nd year =
- a)20,000
- b)16,000
- c)12,800
- d)10,240
Correct answer is option 'B'. Can you explain this answer?
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Most Upvoted Answer
Consider the following information:I. Rate of depreciation under the w...
Calculation of Depreciation:
Written Down Value (WDV) at the beginning of the year = Original Cost - Depreciation charged till last year
= Rs.1,00,000 - Rs.20,000 = Rs.80,000
Depreciation for the current year = WDV at the beginning of the year * Rate of Depreciation
= Rs.80,000 * 20/100 = Rs.16,000
Therefore, the depreciation for the 2nd year is Rs.16,000.
Explanation:
The given information states that the rate of depreciation under the written down method is 20%, the original cost of the asset is Rs.1,00,000, and the residual value of the asset at the end of its useful life is Rs.40,960.
The written down method of depreciation is a method of calculating depreciation where the depreciation is charged on the WDV of the asset at the beginning of the year. The rate of depreciation is applied to the WDV to calculate the depreciation for the current year.
In this case, the WDV at the beginning of the 2nd year is Rs.80,000, which is the original cost of the asset minus the depreciation charged till the end of the 1st year, which is Rs.20,000. Therefore, the depreciation for the 2nd year is calculated as Rs.80,000 multiplied by 20/100, which is equal to Rs.16,000.
Hence, the correct option is B, i.e., Rs.16,000.
Written Down Value (WDV) at the beginning of the year = Original Cost - Depreciation charged till last year
= Rs.1,00,000 - Rs.20,000 = Rs.80,000
Depreciation for the current year = WDV at the beginning of the year * Rate of Depreciation
= Rs.80,000 * 20/100 = Rs.16,000
Therefore, the depreciation for the 2nd year is Rs.16,000.
Explanation:
The given information states that the rate of depreciation under the written down method is 20%, the original cost of the asset is Rs.1,00,000, and the residual value of the asset at the end of its useful life is Rs.40,960.
The written down method of depreciation is a method of calculating depreciation where the depreciation is charged on the WDV of the asset at the beginning of the year. The rate of depreciation is applied to the WDV to calculate the depreciation for the current year.
In this case, the WDV at the beginning of the 2nd year is Rs.80,000, which is the original cost of the asset minus the depreciation charged till the end of the 1st year, which is Rs.20,000. Therefore, the depreciation for the 2nd year is calculated as Rs.80,000 multiplied by 20/100, which is equal to Rs.16,000.
Hence, the correct option is B, i.e., Rs.16,000.
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Consider the following information:I. Rate of depreciation under the written down method = 20%.II. Original cost of the asset = Rs.1,00,000.III. Residual value of the asset at the end of useful life = Rs.40,960.Q.Depreciation for 2nd year =a)20,000b)16,000c)12,800d)10,240Correct answer is option 'B'. Can you explain this answer?
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