Question

The cost of a machine depreciated by Rs. 4,000 during the first year and by Rs. 3,600 during the second year. Calculate its cost at the end of the third year

Answer 1

Difference between depreciation of 1st year and 2nd year$=4000-3600=Rs.400$

$\Rightarrow$Depreciation of one year on $Rs.4000=Rs.400$

$\Rightarrow$Rate of depreciation $=\frac{400\times 100}{4000}=10$%

Let the original cost of the machine be $Rs100$

$\therefore$Value after one year$=Rs.100-10\%of100=100-\frac{10}{100}\times 100=Rs.90$

Depreciation during second year$=10\%$ of $90$$=\frac{10}{100}\times 90=Rs.9$

When depreciation during second year is Rs. 9 then original cost=Rs.100

When Depreciation during the second year is Rs.3600 then original cost$=\frac{100}{9}\times 3600=Rs.40000$

Cost of the machine after one year$=40000-4000=Rs.36000$

Cost of the machine after second year$=36000-3600=Rs.32400$

$\therefore$Depreciation in third year$=10\%$of $32400$$=\frac{10}{100}\times 32400=Rs.3240$

Cost of the machine after third year$=32400-3240=Rs.29160$