Cost of machinery is missing.Rate of depreciation = (Real Value - Scrap Value)÷ expected life

Calculation of Depreciation Rate using Written Down Value Method

Step 1: Determine the Cost of the Machinery
The cost of the machinery is the original cost of the machine plus any other expenses incurred in acquiring and installing the machinery. Let's assume that the cost of the machinery is 200,000.

Step 2: Determine the Scrap Value
The scrap value of the machinery is the estimated value of the machinery at the end of its useful life. Let's assume that the scrap value of the machinery is 40,000.

Step 3: Determine the Depreciable Value
The depreciable value is the cost of the machinery minus the scrap value. In this case, the depreciable value is 200,000 - 40,000 = 160,000.

Step 4: Determine the Useful Life
The useful life of the machinery is the estimated period during which the machinery will be useful. Let's assume that the useful life of the machinery is 5 years.

Step 5: Determine the Depreciation Rate
The depreciation rate is the percentage of the depreciable value that is charged as depreciation each year. The formula for calculating the depreciation rate using the written down value method is:

Depreciation Rate = (1 - Scrap Value/Cost of Machinery)^(1/Useful Life) x 100%

Substituting the values we have:

Depreciation Rate = (1 - 40,000/200,000)^(1/5) x 100%
Depreciation Rate = 12.49%

Therefore, the per cent rate of depreciation per annum using the written down value method is 12.49%.

Explanation of Written Down Value Method

The written down value method is a popular method used to calculate depreciation of assets. Under this method, the depreciation is charged on the original cost of the asset minus the accumulated depreciation. This means that the depreciation charge decreases every year as the asset's value decreases.

The formula used to calculate depreciation under the written down value method is:

Depreciation = (Cost of Asset - Accumulated Depreciation) x Depreciation Rate

The depreciation rate is calculated using the formula shown above. The useful life of the asset, the cost of the asset, and the scrap value of the asset are used to calculate the depreciation rate.

Using the written down value method, the asset's book value is reduced every year by the amount of depreciation charged. At the end of the asset's useful life, its book value will be equal to its scrap value.