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Machine is depreciated at the rate of 20% on reducing balance. The original cost of the machine was Rs. 1,00,000 and its ultimate scrap value was Rs. 30,000. The effective life of the machine is (a) 4.5 years (appx.) (b) 5.4 years (appx.) (c) 5 years (appx.) (d) None of these?
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Machine is depreciated at the rate of 20% on reducing balance. The ori...
Calculation of Depreciation
Original Cost of the Machine = Rs. 1,00,000
Scrap Value of the Machine = Rs. 30,000
Depreciation Rate = 20%
The depreciation on the machine is calculated by applying the depreciation rate on the reducing balance method. The calculation for the first year is as follows:
Depreciation for the first year = 20% of Rs. 1,00,000 = Rs. 20,000
Value of the machine at the end of the first year = Rs. 1,00,000 - Rs. 20,000 = Rs. 80,000
Similarly, the depreciation and value of the machine at the end of each year can be calculated as follows:
Year 2:
Depreciation for the second year = 20% of Rs. 80,000 = Rs. 16,000
Value of the machine at the end of the second year = Rs. 80,000 - Rs. 16,000 = Rs. 64,000
Year 3:
Depreciation for the third year = 20% of Rs. 64,000 = Rs. 12,800
Value of the machine at the end of the third year = Rs. 64,000 - Rs. 12,800 = Rs. 51,200
Year 4:
Depreciation for the fourth year = 20% of Rs. 51,200 = Rs. 10,240
Value of the machine at the end of the fourth year = Rs. 51,200 - Rs. 10,240 = Rs. 40,960
Year 5:
Depreciation for the fifth year = 20% of Rs. 40,960 = Rs. 8,192
Value of the machine at the end of the fifth year = Rs. 40,960 - Rs. 8,192 = Rs. 32,768
Effective Life of the Machine
The effective life of the machine is the number of years for which the machine can be used effectively before it becomes obsolete or needs to be replaced. In this case, the effective life of the machine can be calculated by comparing its scrap value with its value at the end of the fifth year.
Value of the machine at the end of the fifth year = Rs. 32,768
Scrap Value of the machine = Rs. 30,000
Since the value of the machine at the end of the fifth year (Rs. 32,768) is greater than its scrap value (Rs. 30,000), the machine can still be used effectively after the fifth year. Therefore, the effective life of the machine is more than five years.
Answer: (d) None of these. The effective life of the machine is more than five years.
Original Cost of the Machine = Rs. 1,00,000
Scrap Value of the Machine = Rs. 30,000
Depreciation Rate = 20%
The depreciation on the machine is calculated by applying the depreciation rate on the reducing balance method. The calculation for the first year is as follows:
Depreciation for the first year = 20% of Rs. 1,00,000 = Rs. 20,000
Value of the machine at the end of the first year = Rs. 1,00,000 - Rs. 20,000 = Rs. 80,000
Similarly, the depreciation and value of the machine at the end of each year can be calculated as follows:
Year 2:
Depreciation for the second year = 20% of Rs. 80,000 = Rs. 16,000
Value of the machine at the end of the second year = Rs. 80,000 - Rs. 16,000 = Rs. 64,000
Year 3:
Depreciation for the third year = 20% of Rs. 64,000 = Rs. 12,800
Value of the machine at the end of the third year = Rs. 64,000 - Rs. 12,800 = Rs. 51,200
Year 4:
Depreciation for the fourth year = 20% of Rs. 51,200 = Rs. 10,240
Value of the machine at the end of the fourth year = Rs. 51,200 - Rs. 10,240 = Rs. 40,960
Year 5:
Depreciation for the fifth year = 20% of Rs. 40,960 = Rs. 8,192
Value of the machine at the end of the fifth year = Rs. 40,960 - Rs. 8,192 = Rs. 32,768
Effective Life of the Machine
The effective life of the machine is the number of years for which the machine can be used effectively before it becomes obsolete or needs to be replaced. In this case, the effective life of the machine can be calculated by comparing its scrap value with its value at the end of the fifth year.
Value of the machine at the end of the fifth year = Rs. 32,768
Scrap Value of the machine = Rs. 30,000
Since the value of the machine at the end of the fifth year (Rs. 32,768) is greater than its scrap value (Rs. 30,000), the machine can still be used effectively after the fifth year. Therefore, the effective life of the machine is more than five years.
Answer: (d) None of these. The effective life of the machine is more than five years.
Community Answer
Machine is depreciated at the rate of 20% on reducing balance. The ori...
The answer will be option- b
As we depreciate the value after 5 years comes out to be 32768 which is more than 30000 but as we depreciate further it becomes 2621.44 which is lower than the value required, so the answer should be between 5-6 years which is 5.4
As we depreciate the value after 5 years comes out to be 32768 which is more than 30000 but as we depreciate further it becomes 2621.44 which is lower than the value required, so the answer should be between 5-6 years which is 5.4
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Machine is depreciated at the rate of 20% on reducing balance. The original cost of the machine was Rs. 1,00,000 and its ultimate scrap value was Rs. 30,000. The effective life of the machine is (a) 4.5 years (appx.) (b) 5.4 years (appx.) (c) 5 years (appx.) (d) None of these?
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Machine is depreciated at the rate of 20% on reducing balance. The original cost of the machine was Rs. 1,00,000 and its ultimate scrap value was Rs. 30,000. The effective life of the machine is (a) 4.5 years (appx.) (b) 5.4 years (appx.) (c) 5 years (appx.) (d) None of these? 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 Machine is depreciated at the rate of 20% on reducing balance. The original cost of the machine was Rs. 1,00,000 and its ultimate scrap value was Rs. 30,000. The effective life of the machine is (a) 4.5 years (appx.) (b) 5.4 years (appx.) (c) 5 years (appx.) (d) None of these? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Machine is depreciated at the rate of 20% on reducing balance. The original cost of the machine was Rs. 1,00,000 and its ultimate scrap value was Rs. 30,000. The effective life of the machine is (a) 4.5 years (appx.) (b) 5.4 years (appx.) (c) 5 years (appx.) (d) None of these?.
Machine is depreciated at the rate of 20% on reducing balance. The original cost of the machine was Rs. 1,00,000 and its ultimate scrap value was Rs. 30,000. The effective life of the machine is (a) 4.5 years (appx.) (b) 5.4 years (appx.) (c) 5 years (appx.) (d) None of these? 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 Machine is depreciated at the rate of 20% on reducing balance. The original cost of the machine was Rs. 1,00,000 and its ultimate scrap value was Rs. 30,000. The effective life of the machine is (a) 4.5 years (appx.) (b) 5.4 years (appx.) (c) 5 years (appx.) (d) None of these? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Machine is depreciated at the rate of 20% on reducing balance. The original cost of the machine was Rs. 1,00,000 and its ultimate scrap value was Rs. 30,000. The effective life of the machine is (a) 4.5 years (appx.) (b) 5.4 years (appx.) (c) 5 years (appx.) (d) None of these?.
Solutions for Machine is depreciated at the rate of 20% on reducing balance. The original cost of the machine was Rs. 1,00,000 and its ultimate scrap value was Rs. 30,000. The effective life of the machine is (a) 4.5 years (appx.) (b) 5.4 years (appx.) (c) 5 years (appx.) (d) None of these? in English & in Hindi are available as part of our courses for CA Foundation.
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Machine is depreciated at the rate of 20% on reducing balance. The original cost of the machine was Rs. 1,00,000 and its ultimate scrap value was Rs. 30,000. The effective life of the machine is (a) 4.5 years (appx.) (b) 5.4 years (appx.) (c) 5 years (appx.) (d) None of these?, a detailed solution for Machine is depreciated at the rate of 20% on reducing balance. The original cost of the machine was Rs. 1,00,000 and its ultimate scrap value was Rs. 30,000. The effective life of the machine is (a) 4.5 years (appx.) (b) 5.4 years (appx.) (c) 5 years (appx.) (d) None of these? has been provided alongside types of Machine is depreciated at the rate of 20% on reducing balance. The original cost of the machine was Rs. 1,00,000 and its ultimate scrap value was Rs. 30,000. The effective life of the machine is (a) 4.5 years (appx.) (b) 5.4 years (appx.) (c) 5 years (appx.) (d) None of these? theory, EduRev gives you an
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