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Question
An asset is purchased for ₹ 50,000. The rate of depreciation is 15% p.a. Calculate the annual depreciation for the first two years under the diminishing balance method.
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Solution
Calculation of depreciation of Machinery-
| Cost of the assets | 50,000 |
| Less: Depreciation for 1st year at 15% as 5000 | 7,500 |
| 42,500 | |
| Less: Depreciation for 2nd year at 15% as 42,500 | 6,375 |
| Book Value | 36,125 |
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