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Question
Mr. Pritesh reduced the value of his assets by 5% each year, which were purchased for Rs.50,00,000/-. Find the value of assets after 2 years.
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Solution
Given, initial value of assets = V
= ₹ 50,00,000/-
Rate of depreciation per annum = r = 5%
Number of years = n = 2 years
∴ Value of assets after two years = V`(1 - "r"/100)^"n"`
= `50,00,000(1 - 5/100)^2`
= `50,00,000(19/20)^2`
= `(50,00,000 xx 361)/400`
= 12,500 × 361
= 45,12,500
∴ The value of assets after two years is ₹ 45,12,500/-.
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What is ‘Depreciation’?
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?
Why is charging depreciation important for true profit calculation?
Which is NOT a valid reason for charging depreciation every 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?
