Ad-Free CAclubindia and Daily Updates on your mobile. Subscribe Now!

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

Reply
Follow
Share

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

Upgrade to CAclubindia Pro. Subscribe Now!

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

Upgrade to CAclubindia Pro. Subscribe Now!

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 ????