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A machine, the life of which is estimated to be 10years cost rs.10,000, calculate the scrap value at the end of its life depreciation on the reducing instalment system being charged at 10%per annum?
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A machine, the life of which is estimated to be 10years cost rs.10,000...
Calculating the Scrap Value of a Machine on the Reducing Instalment System
The scrap value of a machine is the amount it is worth at the end of its useful life. To calculate the scrap value of a machine, you need to take into account its original cost, its estimated life, and the method of depreciation being used.
Original Cost of the Machine
The original cost of the machine is Rs.10,000.
Estimated Life of the Machine
The estimated life of the machine is 10 years.
Depreciation on the Reducing Instalment System
Depreciation on the reducing instalment system means that the depreciation amount decreases each year. In this case, the depreciation rate is 10% per annum.
Calculating the Depreciation Amount
To calculate the depreciation amount, you need to use the following formula:
Depreciation amount = (Original cost – Scrap value) × Depreciation rate
Since we want to calculate the scrap value, we can rearrange the formula to get:
Scrap value = Original cost – (Depreciation amount ÷ Depreciation rate)
We can calculate the depreciation amount for each year using the reducing instalment system:
Year 1: Depreciation amount = (Rs.10,000 – Scrap value) × 10% = Rs.1,000
Year 2: Depreciation amount = (Rs.9,000 – Scrap value) × 10% = Rs.900
Year 3: Depreciation amount = (Rs.8,100 – Scrap value) × 10% = Rs.810
Year 4: Depreciation amount = (Rs.7,290 – Scrap value) × 10% = Rs.729
Year 5: Depreciation amount = (Rs.6,561 – Scrap value) × 10% = Rs.656.1
Year 6: Depreciation amount = (Rs.5,905.9 – Scrap value) × 10% = Rs.590.59
Year 7: Depreciation amount = (Rs.5,315.31 – Scrap value) × 10% = Rs.531.53
Year 8: Depreciation amount = (Rs.4,783.78 – Scrap value) × 10% = Rs.478.38
Year 9: Depreciation amount = (Rs.4,305.4 – Scrap value) × 10% = Rs.430.54
Year 10: Depreciation amount = (Rs.3,874.86 – Scrap value) × 10% = Rs.387.49
Calculating the Scrap Value
Using the formula we derived earlier, we can calculate the scrap value of the machine:
Scrap value = Rs.10,000 – (Rs.1,000 + Rs.900 + Rs.810 + Rs.729 + Rs.656.1 + Rs.590.59 + Rs.531.53 + Rs.478.38 + Rs.430.54 + Rs.387.49 ÷ 10%) = Rs.3,095.96
Therefore, the scrap value of the machine at the end of its life is Rs.3,095.96.
The scrap value of a machine is the amount it is worth at the end of its useful life. To calculate the scrap value of a machine, you need to take into account its original cost, its estimated life, and the method of depreciation being used.
Original Cost of the Machine
The original cost of the machine is Rs.10,000.
Estimated Life of the Machine
The estimated life of the machine is 10 years.
Depreciation on the Reducing Instalment System
Depreciation on the reducing instalment system means that the depreciation amount decreases each year. In this case, the depreciation rate is 10% per annum.
Calculating the Depreciation Amount
To calculate the depreciation amount, you need to use the following formula:
Depreciation amount = (Original cost – Scrap value) × Depreciation rate
Since we want to calculate the scrap value, we can rearrange the formula to get:
Scrap value = Original cost – (Depreciation amount ÷ Depreciation rate)
We can calculate the depreciation amount for each year using the reducing instalment system:
Year 1: Depreciation amount = (Rs.10,000 – Scrap value) × 10% = Rs.1,000
Year 2: Depreciation amount = (Rs.9,000 – Scrap value) × 10% = Rs.900
Year 3: Depreciation amount = (Rs.8,100 – Scrap value) × 10% = Rs.810
Year 4: Depreciation amount = (Rs.7,290 – Scrap value) × 10% = Rs.729
Year 5: Depreciation amount = (Rs.6,561 – Scrap value) × 10% = Rs.656.1
Year 6: Depreciation amount = (Rs.5,905.9 – Scrap value) × 10% = Rs.590.59
Year 7: Depreciation amount = (Rs.5,315.31 – Scrap value) × 10% = Rs.531.53
Year 8: Depreciation amount = (Rs.4,783.78 – Scrap value) × 10% = Rs.478.38
Year 9: Depreciation amount = (Rs.4,305.4 – Scrap value) × 10% = Rs.430.54
Year 10: Depreciation amount = (Rs.3,874.86 – Scrap value) × 10% = Rs.387.49
Calculating the Scrap Value
Using the formula we derived earlier, we can calculate the scrap value of the machine:
Scrap value = Rs.10,000 – (Rs.1,000 + Rs.900 + Rs.810 + Rs.729 + Rs.656.1 + Rs.590.59 + Rs.531.53 + Rs.478.38 + Rs.430.54 + Rs.387.49 ÷ 10%) = Rs.3,095.96
Therefore, the scrap value of the machine at the end of its life is Rs.3,095.96.
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A machine, the life of which is estimated to be 10years cost rs.10,000, calculate the scrap value at the end of its life depreciation on the reducing instalment system being charged at 10%per annum?
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A machine, the life of which is estimated to be 10years cost rs.10,000, calculate the scrap value at the end of its life depreciation on the reducing instalment system being charged at 10%per annum? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about A machine, the life of which is estimated to be 10years cost rs.10,000, calculate the scrap value at the end of its life depreciation on the reducing instalment system being charged at 10%per annum? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A machine, the life of which is estimated to be 10years cost rs.10,000, calculate the scrap value at the end of its life depreciation on the reducing instalment system being charged at 10%per annum?.
A machine, the life of which is estimated to be 10years cost rs.10,000, calculate the scrap value at the end of its life depreciation on the reducing instalment system being charged at 10%per annum? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about A machine, the life of which is estimated to be 10years cost rs.10,000, calculate the scrap value at the end of its life depreciation on the reducing instalment system being charged at 10%per annum? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A machine, the life of which is estimated to be 10years cost rs.10,000, calculate the scrap value at the end of its life depreciation on the reducing instalment system being charged at 10%per annum?.
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