CA Foundation · Quantitative Aptitude · Mathematics of Finance
A delivery van costing ₹8,00,000 is depreciated at 10% per annum on the written-down value (reducing balance) method. What is its book value at the end of 2 years?
The book value after 2 years is ₹6,48,000. Under the reducing balance method, depreciation is charged each year on the opening written-down value, so the value is multiplied by 0.9 twice: 8,00,000 × 0.9 × 0.9 = ₹6,48,000.
- A₹6,40,000
- B₹6,48,000Correct
- C₹6,56,000
- D₹7,20,000
Explanation
WDV after year 1 = 8,00,000 × 0.9 = 7,20,000. After year 2 = 7,20,000 × 0.9 = 6,48,000. Option ₹6,40,000 results from straight-line style deduction of 10% of cost twice, which is the wrong base.
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