Depreciation - SS3 Mathematics Lesson Note
Depreciation is the loss in market value of items as time goes by. The depreciation value also known as the book value is a percentage of the value of the item at the beginning of the year.
Example 8 The value of a car depreciates by 20% of its value in the beginning of the each year. If the car cost N1.5 million, find the book value after 3 years.
Solution
|
\[\mathbf{1}\mathbf{st}\mathbf{\ year:}\] |
|---|
\[Value\ of\ car:\]
\[N1,500,000\]
\[20\%\ depreciation:\]
\[(\frac{20}{100} \times 1500000)\]
\[N300,000\]
\[Value\ after\ one\ year:\]
\[N1,200,000\]
\[\mathbf{2}\mathbf{nd}\mathbf{\ year:}\]
\[Value\ of\ car:\]
\[N1,500,000\]
\[20\%\ depreciation:\]
\[(\frac{20}{100} \times 1200000)\]
\[N240,000\]
\[Value\ after\ 2\ years:\]
\[N960,000\]
\[\mathbf{3}\mathbf{rd}\mathbf{\ year:}\]
\[Value\ of\ car:\]
\[N960,000\]
\[20\%\ depreciation:\]
\[(\frac{20}{100} \times 960000)\]
\[N192,000\]
\[Value\ after\ 3\ years:\]
\[N768,000\]
\[Therefore,\ book\ value\ after\ 3\ years\ = \ N768,000\]