MAT112: BUSINESS MATHEMATIC

CHAPTER 4: MATHEMATICAL APPLICATION IN ACCOUNTING

4.1 DEPRECIATION

QUESTION 1
A car costing RM 98,000 depreciates at a rate of r%. Its scrap value at the end of 7 years is
RM20,000. Using the reducing balance method, find r and the accumulated depreciation at
the end of 6 years.
(5 marks)

QUESTION 2
The book value for an asset at the end of the second year and the third year were RM16,000
and RM12,000 respectively. Using the reducing balance method, calculate the rate of
depreciation.
(6 marks)

QUESTION 3
Rajoo bought a lorry at RM 250,000. It is estimated to last for 10 years and with the scrap
value of RM 165,000. Find the book value of the lorry after 5 years by using the reducing
balance method.
(6 marks)
QUESTION 4
NS Company bought an excavator for RM72,000. The useful life of the excavator is 8 years.
If the book value of the excavator at the end of 4 years is RM42,000, find its scrap value at
the end of 8 years using the straight-line method.
(5 marks)
QUESTION 5
Radin bought a car that cost RM120,000. The useful life of the car is 8 years. If the salvage
value of the car is RM50,000, find the book value of the car after 4 years using the declining
balance method.
(5 marks)
QUESTION 6
Sunny Company buys a bus at RM150,000. The useful life of the bus is 10 years. If the book
value of at the end of 5 years is RM90,000, find the scrap value of the bus at the end of 10
years using the straight-line method.
(6 marks)

QUESTION 7
The cost of a new machine is RM65,000. Calculate the rate of the depreciation using the
reducing balance method, if the book value of the machine at the end of second year is
RM41,600.
(5 marks)
QUESTION 8
Ahmad wants to sell his car that has been used for 9 years. The car was bought for
RM155,000. The scrap value after 15 years is estimated to be RM29,500. Two second-hand
car dealer A and B offered to buy his car. Dealer A used the reducing balance method while
Dealer B used the straight-line method to calculate the depreciation. Find the book value at
the end of 9 years for both dealers. Hence, state which dealer should Ahmad choose.
(8 marks)