Question

Purchase Price of Machine Rs. 1,50,000, Installation Charges Rs. 50,000, Residual Value Rs. 81,920, Useful life 4 years, the amount of depreciation under WDV Method for the third year will be:

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

Answer 1

The correct option is C Rs. 25,600

Here , formula for WDV is - deprecciation rate = 100 * (1-n√s/c)

where n = number of years , s = salvage value , c = cost of asset

=[1-4√40960/100000] * 100

= [1-4√0.4096] * 100

= [1-.80]*100

=.20*100

=20

1st year WDV = 200000*20% = 40000 = 200000-40000 = 160000

2nd Year WDV = 160000*20% = 160000-32000 = 128000

3rd Year WDV = 128000*20% = 25600