PRC-1 · Chapter 6 · Question 11 of 100
An entity purchases a vehicle for Rs. 800,000. The business uses the reducing balance method at a rate of 20% per annum. What is the depreciation expense for the SECOND year of ownership?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Rs. 128,000
Explanation
Year 1 depreciation: 20% of 800k = 160k. Year 1 carrying amount = 800k - 160k = 640k. Year 2 depreciation = 20% of 640k = Rs. 128,000.
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