RP&A purchased some non-current assets four years ago at a cost of €19,800.It no longer needs these assets so are going to sell them today at a price of €3,500.The assets have been
Depreciated using 20% reducing balances.What is the current book value of these assets?

Question

Quizplus · Accepted Answer

The current book value of the assets can be calculated using the reducing balance method of depreciation at a rate of 20%. The formula for each year's ending book value is: Beginning Book Value * (1 - Depreciation Rate). Year 1: €19,800 * (1 - 0.20) = €15,840Year 2: €15,840 * (1 - 0.20) = €12,672Year 3: €12,672 * (1 - 0.20) = €10,137.60Year 4: €10,137.60 * (1 - 0.20) = €8,110.08Therefore, the current book value of the assets is €8,110.08.

RP&A Purchased Some Non-Current Assets Four Years Ago at a Cost