PRC-1 · Chapter 6 · Question 32 of 100
The written down value of a fixture at 30 June 2022 was Rs. 86,400. It was originally purchased on 1 January 2020 and depreciated at 20% p.a. on the reducing balance method. What was its original purchase cost?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Rs. 150,000
Explanation
Time passed: Jan-Jun 2020 (6 months at 10%), Jul 2020-Jun 2021 (1 yr at 20%), Jul 2021-Jun 2022 (1 yr at 20%). WDV at 30.6.21 = 86,400 / 0.8 = 108,000. WDV at 30.6.20 = 108,000 / 0.8 = 135,000. Cost at 1.1.20 = 135,000 / (1 - 0.10) = 150,000.
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