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A machine was purchased on 1 january 2011 Depreciation was written off at 10 percent per annum on diminishing balance method. At the end of 2013 the depreciated value of asset $72,900.find the cost price of the asset.?
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A machine was purchased on 1 january 2011 Depreciation was written off...
Cost Price of Asset
The problem gives us the following information:
- The asset was purchased on 1 January 2011.
- Depreciation was written off at 10% per annum on a diminishing balance method.
- At the end of 2013, the depreciated value of the asset was $72,900.
To find the cost price of the asset, we need to work backwards from the depreciated value.
Depreciation Calculation
First, we need to calculate the total depreciation for the asset from 2011 to 2013. We can do this using the diminishing balance method, which means that the depreciation rate is applied to the remaining value of the asset each year.
Depreciation rate = 10%
Year 1 depreciation = Cost price x depreciation rate = CP x 0.1
Year 1 remaining value = Cost price - Year 1 depreciation = CP - (CP x 0.1)
Year 2 depreciation = Year 1 remaining value x depreciation rate = (CP - (CP x 0.1)) x 0.1
Year 2 remaining value = Year 1 remaining value - Year 2 depreciation
Year 3 depreciation = Year 2 remaining value x depreciation rate = (Year 1 remaining value - Year 2 depreciation) x 0.1
Year 3 remaining value = Year 2 remaining value - Year 3 depreciation = $72,900
Solving for the remaining value at the end of Year 3, we get:
$72,900 = (CP - (CP x 0.1)) - ((CP - (CP x 0.1)) x 0.1) - (((CP - (CP x 0.1)) - ((CP - (CP x 0.1)) x 0.1)) x 0.1)
Simplifying this equation, we get:
$72,900 = CP(1 - 0.1 - 0.09 - 0.081)
$72,900 = CP(0.729)
CP = $100,000
Cost Price of Asset
Therefore, the cost price of the asset is $100,000.
The problem gives us the following information:
- The asset was purchased on 1 January 2011.
- Depreciation was written off at 10% per annum on a diminishing balance method.
- At the end of 2013, the depreciated value of the asset was $72,900.
To find the cost price of the asset, we need to work backwards from the depreciated value.
Depreciation Calculation
First, we need to calculate the total depreciation for the asset from 2011 to 2013. We can do this using the diminishing balance method, which means that the depreciation rate is applied to the remaining value of the asset each year.
Depreciation rate = 10%
Year 1 depreciation = Cost price x depreciation rate = CP x 0.1
Year 1 remaining value = Cost price - Year 1 depreciation = CP - (CP x 0.1)
Year 2 depreciation = Year 1 remaining value x depreciation rate = (CP - (CP x 0.1)) x 0.1
Year 2 remaining value = Year 1 remaining value - Year 2 depreciation
Year 3 depreciation = Year 2 remaining value x depreciation rate = (Year 1 remaining value - Year 2 depreciation) x 0.1
Year 3 remaining value = Year 2 remaining value - Year 3 depreciation = $72,900
Solving for the remaining value at the end of Year 3, we get:
$72,900 = (CP - (CP x 0.1)) - ((CP - (CP x 0.1)) x 0.1) - (((CP - (CP x 0.1)) - ((CP - (CP x 0.1)) x 0.1)) x 0.1)
Simplifying this equation, we get:
$72,900 = CP(1 - 0.1 - 0.09 - 0.081)
$72,900 = CP(0.729)
CP = $100,000
Cost Price of Asset
Therefore, the cost price of the asset is $100,000.
Community Answer
A machine was purchased on 1 january 2011 Depreciation was written off...
WDV on 31st December 2013 = RS-72900 x 100/90
= RS-81,000
WDV on 31st December 2012 = RS-81,000 x 100/90
= RS-90,000.
Value on 1st January 2013 = RS-90,000 x 100/90
= RS-1,00,000.
= RS-81,000
WDV on 31st December 2012 = RS-81,000 x 100/90
= RS-90,000.
Value on 1st January 2013 = RS-90,000 x 100/90
= RS-1,00,000.
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A machine was purchased on 1 january 2011 Depreciation was written off at 10 percent per annum on diminishing balance method. At the end of 2013 the depreciated value of asset $72,900.find the cost price of the asset.?
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A machine was purchased on 1 january 2011 Depreciation was written off at 10 percent per annum on diminishing balance method. At the end of 2013 the depreciated value of asset $72,900.find the cost price of the asset.? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about A machine was purchased on 1 january 2011 Depreciation was written off at 10 percent per annum on diminishing balance method. At the end of 2013 the depreciated value of asset $72,900.find the cost price of the asset.? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A machine was purchased on 1 january 2011 Depreciation was written off at 10 percent per annum on diminishing balance method. At the end of 2013 the depreciated value of asset $72,900.find the cost price of the asset.?.
A machine was purchased on 1 january 2011 Depreciation was written off at 10 percent per annum on diminishing balance method. At the end of 2013 the depreciated value of asset $72,900.find the cost price of the asset.? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about A machine was purchased on 1 january 2011 Depreciation was written off at 10 percent per annum on diminishing balance method. At the end of 2013 the depreciated value of asset $72,900.find the cost price of the asset.? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A machine was purchased on 1 january 2011 Depreciation was written off at 10 percent per annum on diminishing balance method. At the end of 2013 the depreciated value of asset $72,900.find the cost price of the asset.?.
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