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Question
Grace Fashion Boutique purchased a sewing machine at Rs.25,000/-. After 3 years machine was sold at a depreciated value Rs.18,225/- Find the rate of depreciation.
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Solution
Given, purchase price of sewing machine = V = ₹ 25,000/-
Selling price of machine = D.V. = ₹ 18,225/-
Number of years = n = 3 years
By using, D.V. = V`(1 - "r"/100)^"n"`
18,225 = 25,000`(1 - "r"/100)^3`
`(1 - "r"/100)^3 = (18,225)/(25,000) = 729/1000 = (9/10)^3`
`(100 - "r")/100 = 9/10`
∴ 100 – r = 90
∴ r = 10%
∴ The rate of depreciation is 10% per annum.
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What is depreciation in accounting?
Which of the following assets is NOT usually depreciated?
Which term refers to a sudden reduction in asset value due to fire, flood, or accident?
In accounting, which principle is followed by charging depreciation each year?
What causes 'obsolescence' in depreciation?
Which of the following is classified as a 'provision' and not depreciation?
What is one key condition for charging depreciation?
Which point is correct regarding reserves?
