The original cost of furniture amounted to Rs 4,000 and it is decided to write off `5%` on the original cost as Depreciation at the end of each year. Show the Ledger Account as it will appear during the first four years. Show also how the same account will appear if it was decided to write off `5%` p.a. on the diminishing balance of the asset each year.

Answer

[Balance after 4th year; (a) on Original Cost Basis-Rs 3,200; (b) on Diminishing Balance Basis-Rs 3,258.]