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CPT QUERRIES

sanjeev (Student) (29 Points)

28 April 2012

An asset has a useful life of 4 years if it is depreciated by diminishing balance method. Its book value at the end of 4 years is 24% of its original cost. hence the rate of depreciation applied is

A. 20%

B. 30%

C. 25%

D. 35%

answer is 30% but pls show how it comes

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8 Replies

YOGESH MUNDHRA (B.COM (P) IPCC STUDENT) (79 Points)
Replied 28 April 2012

Dear Sanjeev

Take original cost of assest is Rs. 100

Now 1st year dep on 100 @ 30% will be 30 and net wdv will be (100-30)=Rs. 70

in 2nd year dep charged on 70 @ 30% will be 21 & net wdv (70-21) = Rs. 49

in 3rd year dep charged on 49 @ 30% will be 14.7 & net wdv (49-14.7) = Rs. 34.30

in 4 th year dep charged on 34.3 @ 30% will be 10.3 & net wdv (34.3-10.3) = Rs. 24

anthor method

Take calculator & start with 100

Then press (-) 30% get 70, next (-) 30% get 49, next (-) 30% get 34.3, next (-) 30% get 24

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ashish gupta ( student) (1922 Points)
Replied 28 April 2012

yogesh is right. you can try each option like this. and get the right answer. :)

sanjeev (Student) (29 Points)
Replied 28 April 2012

thats's ok but what if there's no options how do i decide it would be 30%

CMA Shilpa Shinde (COST ACCOUNTANT) (217 Points)
Replied 28 April 2012

Dear Sanjeev, Formula for calculation rate of depn under declining balance method. rate = 1 - ((salvage / cost) ^ (1 / life)).

Assuming Original Cost be 1

Applying above using figure given:- = (1-((0.24*1/1)^(1/4)))

= 0.300073

in term of % = 30% i.e., Ans. :-)

sanjeev (Student) (29 Points)
Replied 02 May 2012

thank you shilpa that is the thing i was looking for

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sanjeev (Student) (29 Points)
Replied 22 May 2012

guys pls solve this querry

Ram of Raipur sends out goods costing 100000 to amar of alwar.3/5th of the goods were sold by consignee for rs 70000, commission 2% on sales plus 20% of gross sale less all commission exceeds cost price. the amount of commission will be ????