08-18-2011, 10:43 AM
to find out the rate of depreciation in reducing balance method is r=1-n underroot s/c cant write the proper formula you can see it yourself somewhere , r= rate 1 constant of formula, n=years, s = residual value and c=cost. means if you find out the rate via formula which derived purely from mathematics as it is mentioned in text book F3. you put the residual value in formula this means there is no need to deduct it from the cost again as the formula has already adjusted the figures. and reread the example and se the net book value at end, it should be equal to the residual value, this means formula works perfectly.
