An asset purchased for K55000 depreciates at a flat rate of 10% each year. What is the book value of the asset after 4 years?
The asset depreciates at a flat rate of 10% each year, which means that the book value decreases by 10% each year.
To find the book value after 4 years, we need to calculate the depreciation for each year and subtract it from the original value.
Year 1: 10% of K55000 = K5500
Book value after Year 1 = K55000 - K5500 = K49500
Year 2: 10% of K49500 = K4950
Book value after Year 2 = K49500 - K4950 = K44550
Year 3: 10% of K44550 = K4455
Book value after Year 3 = K44550 - K4455 = K40095
Year 4: 10% of K40095 = K4009.5 (approximated to K4010)
Book value after Year 4 = K40095 - K4010 = K36085
Therefore, the book value of the asset after 4 years is K36085.
To calculate the book value of the asset after 4 years, we need to apply the depreciation rate of 10% annually for four years.
First, calculate the depreciation for each year:
Year 1: 10% of K55000 = K5500
Year 2: 10% of K55000 = K5500
Year 3: 10% of K55000 = K5500
Year 4: 10% of K55000 = K5500
Now subtract the depreciation amount from the original asset value for each year:
Year 1:
Asset value after depreciation = K55000 - K5500 = K49500
Year 2:
Asset value after depreciation = K49500 - K5500 = K44000
Year 3:
Asset value after depreciation = K44000 - K5500 = K38500
Year 4:
Asset value after depreciation = K38500 - K5500 = K33000
Therefore, the book value of the asset after 4 years is K33000.