PRC-1 · Chapter 6 · Question 37 of 100
The depreciation expense for a machine was Rs. 48,000 in 2020, Rs. 33,600 in 2021, and Rs. 23,520 in 2022 using the reducing balance method. What is the depreciation rate?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) 30%
Explanation
Under the reducing balance method, the ratio of depreciation between consecutive years is (1 - r). 33,600 / 48,000 = 0.70. Therefore, 1 - r = 0.70, which means r = 0.30 or 30%.
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