Tutorial Activity

Q.1 What do you mean by depreciation, Explain different methods of depreciation

Q2.The Plant & Machinery purchased for $38,500.The expected life is 5 years and then
sold for scrap $3150

Calculate the depreciation by using

(a) Straight line method

(b) Diminishing/reducing value method (rate of depreciation is 20%)

Q3 Two Projects, Project A & B are given. You are required to give the recommendation
to client which project is profitable to invest.

Year Project A Project B

Initial Investment 180,000 180,000
1 40,000 50,000
2 30,000 20,000
3 50,000 60,000
4 70,000 40,000
5 20,000 30,000
6 60,000 20,000
7 10,000 70,000
8 30,000 10,000

From the information given above calculate (a) Pay Back Period (b) Net Present Value