ECONOMICS
INFLATION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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$7693.85
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$6652.17
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$8898.65
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None of the above
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Detailed explanation-1: -What’s the formula for depreciation? To estimate how much value your car has lost, simply subtract the car’s current fair market value from its purchase price, minus any sales tax or fees.
Detailed explanation-2: -It is given that if car depreciates 20% every year, then after two years the value of car is rupees 420000. Therefore the original price of the car is rupees 656250.
Detailed explanation-3: -Diminishing value for depreciation calculation Value of car at the time of purchase X (Days of use / 365) X (200% / Effective life years of the car) –It will mainly give the vehicle’s base value.
Detailed explanation-4: -Straight Line Depreciation Method = (Cost of an Asset – Residual Value)/Useful life of an Asset. Diminishing Balance Method = (Cost of an Asset * Rate of Depreciation/100) Unit of Product Method =(Cost of an Asset – Salvage Value)/ Useful life in the form of Units Produced.