Multiple choice

Consider the following information: I. Rate of depreciation under the written down method = 20% II. Original cost of asset = Rs. 2, 00, 000 III. Residual value of the asset at the end of useful life = Rs. 81, 920

The estimated useful life of the asset, in years is

  1. 4

  2. 5

  3. 6

  4. 7
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Given WDV rate = 20%, Original cost = 2,00,000, Residual = 81,920. Using WDV formula: 2,00,000 × (1 - 0.20)^n = 81,920. So 0.8^n = 0.4096. Testing values: 0.8^4 = 0.4096 exactly. Therefore n = 4 years. Verifying: 2,00,000 → 1,60,000 → 1,28,000 → 1,02,400 → 81,920 ✓

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