BUSINESS ADMINISTRATION
BUSINESS MATHEMATICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The total amount that an asset is reduced over its useful life
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The difference between the actual cost and the accumulated depreciation
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The difference between cost and scrap value
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The amount depreciation per annum
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Detailed explanation-1: -Amount of Annual Depreciation = Cost of Machine − Scrap Value of Machine Life in Years = 1, 20, 000 − 72, 000 4 = Rs 12, 000 Rate of Depreciation = Amount of Depreciation Cost of Machine × 100 = 12, 000 1, 20, 000 × 100 = 10 % p.a.
Detailed explanation-2: -There are four main methods of depreciation: straight line, double declining, sum of the years’ digits and units of production. Each method is used for different types of businesses and types of assets.
Detailed explanation-3: -Straight-line depreciation spreads the cost of an asset evenly over the time it will be used, also known as its “useful life.” It requires only three inputs to calculate: asset cost, useful life and estimated salvage value-meaning, how much the asset is likely to be worth at the end of its useful life.