Question

Consider the following information:
I. Rate of depreciation under the written down method= 20%
II. Original cost of the asset = Rs. 2,00,000
III. Residual value of the asset at the end of useful life= Rs. 81,920
Depreciation for 3rd year =

• A. Rs. 40,000
• B. Rs. 32,000
• C. Rs. 25,600
• D. Rs. 20,480

Answer 1

Answer: (C)

Rs. 25,600

Calculation of Depreciation is as follows:

For 1st Year

2,00,000@20% = Rs 40,000

For 2nd Year

1,60,000 (2,00,000-40,000)@20% = Rs 32,000

For 3rd Year

1,28,000 (1,60,000-32,000)@20% = Rs 25,600