IP A firm buys three types of equipments A, B and C on January 1, 1991. The purchase price and depreciation provided is as follows: Depreciation Rates on Reducing Balance Method Price Equipment A Equipment B Equipment C 5000 5% 2000 10% 1000 20% Calculate the average rate of depreciation for the years 1991 and 1992. Why do the two rates differ ? (Use geometric mean in calculating average rate).

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A firm buys three types of equipments A, B and C on January 1, 1991. The purchase
price and depreciation provided is as follows :
Price
Depreciation Rates on
Reducing Balance Method
5000
Equipment A
Equipment B
Equipment C
5%
10%
2000
1000
20%
Calculate the average rate of depreciation for the years 1991 and 1992. Why do the two rates
differ ? (Use geometric mean in calculating average rate).
Transcribed Image Text:A firm buys three types of equipments A, B and C on January 1, 1991. The purchase price and depreciation provided is as follows : Price Depreciation Rates on Reducing Balance Method 5000 Equipment A Equipment B Equipment C 5% 10% 2000 1000 20% Calculate the average rate of depreciation for the years 1991 and 1992. Why do the two rates differ ? (Use geometric mean in calculating average rate).
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