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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.The estimated useful life of the asset, in years, is
- a)4
- b)5
- c)6
- d)7
Correct answer is option 'A'. Can you explain this answer?
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Verified Answer
Consider the following information:I. Rate of depreciation under the w...
The estimated useful life of the asset can be calculated using the formula:
Estimated Useful Life = (Original Cost - Residual Value) / Depreciation Rate
Given:
Rate of depreciation under the written down method = 20%
Original cost of the asset = Rs.1,00,000
Residual value of the asset at the end of useful life = Rs.40,960
Calculation:
Depreciation Rate = 20%
Original Cost = Rs.1,00,000
Residual Value = Rs.40,960
Estimated Useful Life = (Original Cost - Residual Value) / Depreciation Rate
Estimated Useful Life = (1,00,000 - 40,960) / 0.20
Estimated Useful Life = 59,040 / 0.20
Estimated Useful Life = 2,95,200
Answer:
The estimated useful life of the asset is 2,95,200 years.
Note: The given answer choices are not provided correctly. The correct estimated useful life is not one of the options given.
Most Upvoted Answer
Consider the following information:I. Rate of depreciation under the w...
Here we know that- original value of assets = 100000 depreciation rate = 20 % scrap value = 40,960 we will use calci in this ques. -r/100+1×p= A p = original value of assets A= scrap value -r likhne k liye r type krne k bad +/- ye sign press = till scrap value appears on the calci screen... no of = means estimated year.. u have to press nd count = till scrape value comes..... when we press = 4times the scrape value comes...so ans is option A.....it helps u...
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Consider the following information:I. Rate of depreciation under the w...
Understanding Depreciation
Depreciation is the reduction in value of an asset over time, and the written down value (WDV) method calculates depreciation based on the asset's book value each year.
Given Information
- Rate of depreciation = 20%
- Original cost of the asset = Rs. 1,00,000
- Residual value = Rs. 40,960
Formula for Written Down Method
The formula for calculating depreciation under the WDV method is:
Depreciation Expense = Book Value at Beginning of Year × Rate of Depreciation
Calculating Depreciation
1. Year 1:
- Depreciation = 1,00,000 × 20% = Rs. 20,000
- Book Value = 1,00,000 - 20,000 = Rs. 80,000
2. Year 2:
- Depreciation = 80,000 × 20% = Rs. 16,000
- Book Value = 80,000 - 16,000 = Rs. 64,000
3. Year 3:
- Depreciation = 64,000 × 20% = Rs. 12,800
- Book Value = 64,000 - 12,800 = Rs. 51,200
4. Year 4:
- Depreciation = 51,200 × 20% = Rs. 10,240
- Book Value = 51,200 - 10,240 = Rs. 40,960
Conclusion
At the end of Year 4, the Book Value equals the Residual Value (Rs. 40,960). Therefore, the estimated useful life of the asset is 4 years.
Thus, the correct answer is option 'A' (4 years).
Depreciation is the reduction in value of an asset over time, and the written down value (WDV) method calculates depreciation based on the asset's book value each year.
Given Information
- Rate of depreciation = 20%
- Original cost of the asset = Rs. 1,00,000
- Residual value = Rs. 40,960
Formula for Written Down Method
The formula for calculating depreciation under the WDV method is:
Depreciation Expense = Book Value at Beginning of Year × Rate of Depreciation
Calculating Depreciation
1. Year 1:
- Depreciation = 1,00,000 × 20% = Rs. 20,000
- Book Value = 1,00,000 - 20,000 = Rs. 80,000
2. Year 2:
- Depreciation = 80,000 × 20% = Rs. 16,000
- Book Value = 80,000 - 16,000 = Rs. 64,000
3. Year 3:
- Depreciation = 64,000 × 20% = Rs. 12,800
- Book Value = 64,000 - 12,800 = Rs. 51,200
4. Year 4:
- Depreciation = 51,200 × 20% = Rs. 10,240
- Book Value = 51,200 - 10,240 = Rs. 40,960
Conclusion
At the end of Year 4, the Book Value equals the Residual Value (Rs. 40,960). Therefore, the estimated useful life of the asset is 4 years.
Thus, the correct answer is option 'A' (4 years).
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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.The estimated useful life of the asset, in years, isa)4b)5c)6d)7Correct answer is option 'A'. Can you explain this answer?
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