Question

Depreciation on Motor car, whose cost is $Rs.58000$ with an accumulated depreciation reserve of $Rs.11600$ , at $20\% p.a$ on diminishing balance will be:
(A) $Rs.9000$
(B) $Rs.9280$
(C) $Rs.10000$
(D) None of these

Answer 1

Hint: In order to answer this question, to find the diminishing balance, we will first find the cost of a Motor car after the depreciation by subtracting the actual cost from the depreciation cost. And then we will find the diminishing balance at $20\% p.a$ .

Complete step-by-step solution:
The cost of a Motor car is $Rs.58000$ .
Now, depreciation on the Motor car reserve of $Rs.11600$ at $20\% p.a$ .
So, now we will find the cost of a Motor car after the depreciation.
So, the depreciation, we will subtract from the actual cost of Motor car:
$= Rs.(58000 - 11600)$
$ = Rs.46400 $
Now, we can find the depreciation at $20\% p.a$ on diminishing balance is:
$= 46400 \times 20\% $
$= 46400 \times \dfrac{{20}}{{100}} $
$= Rs.9280 $
Hence, the correct option is (B) $Rs.9280$ .

Note: The value of a fixed asset after all accrued depreciation has been deducted is known as depreciation expense. The depreciated cost of industry, in a wider economic context, is the total amount of capital that is "used up" in a given time, such as a fiscal year.