alleryMachine cost ₹5,00,000, residual ₹50,000, life 5 years. WDV rate = 1 − ⁵√(50,000/5,00,000) × 100. Approx WDV rate:
AAbout 25% per annum
BAbout 37% per annum
CAbout 50% per annum
DAbout 60% per annum
Answer & Solution
Correct answer: B. About 37% per annum
1. Ratio = 50,000/5,00,000 = 0.1.
2. ⁵√0.1 ≈ 0.6310.
3. WDV rate = 1 − 0.6310 = 0.3690, i.e. about 37%.
_Source: ICAI BoS Foundation Paper 1, Ch 5 "Depreciation & Amortisation", §3.2 formula_
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