An excavator costs Rs. 20,00,000 and has an estimated life of 8 years. It has no salvage value at the end of 8 years. The book value of the excavator at the end of 3 years using general double declining balance method is

Answer: Option A

The double declining balance (DDB) method is an accelerated depreciation method that depreciates the asset faster in the earlier years.

The formula for DDB depreciation is:

Depreciation for the year = 2 × (1 / useful life) × book value at beginning of year

Given:

Cost of excavator = Rs. 20,00,000

Estimated life = 8 years

Salvage value = Rs. 0

Depreciation rate = 2 × (1 / 8) = 25%

Year 1:
Depreciation = 25% of 20,00,000 = Rs. 5,00,000
Book value at end of Year 1 = 20,00,000 - 5,00,000 = Rs. 15,00,000

Year 2:
Depreciation = 25% of 15,00,000 = Rs. 3,75,000
Book value at end of Year 2 = 15,00,000 - 3,75,000 = Rs. 11,25,000

Year 3:
Depreciation = 25% of 11,25,000 = Rs. 2,81,250
Book value at end of Year 3 = 11,25,000 - 2,81,250 = Rs. 8,43,750

Therefore, the correct answer is: Rs. 8,43,750 (Option A).