Depreciation accounting -1

Use Prsent Value

=567000 / 90% = 630000

=630000 / 90% = 700000

I agree with Himanshu , but if scrap value is considered  while arriving Depreciation percentage of 10% we have to

adjust scrap value also for finding out the cost of asset.

This is only my view

In CPT, we are allowed to use Calc.

So, the easiest way to calculate is

Present Value / ( 1 - rate of depri in decimal ) then press " = " for the number of years given.

For ur question it will be like,

567000 / 0.9 then press = TWO times.

Answer works out to be 700000.

Hi mridul, the answer to ur question is :

the machinery is being depreciated for two years on WDV basis. its book value now is 

Book value at the end of first year = HC - 10% depreciation = 90 % of historical cost

BV at the end of second year = BV at the end of 1st year - 10% dep. = 90% of BV at the end of 1st year

It means BV at the end of 1st year is 90% of HC and BV at the end of 2nd year is 90% of BV of 1st year.

it can be written as

BV at the end of second year =     HC        x        90%            X   90%

    5,67,000 = HC x 90% x 90%

therefore HC = 5,67,000            = Rs. 7,00,000                                                          .

                            90%x90%

Regards, CA Shakuntala Chhangani                                                      

thank you mam

let us assume cost is 100 then after 1st year wdv is 90 then after 2nd year 81.

if 81 is 567000 then 100=????

100=Rs.700000

i agree with the above parties i m provided different method.