Reverse reducing balance depreciation for one year Steps:

• Let original cost = C.
• Full year's depreciation charged in year of purchase (2021, assuming intent), so net book value at 31 December 2021 = C × (1 - 0.25) = 0.75C.
• Set 0.75C = 18,000.
• Solve: C = 18,000 ÷ 0.75 = 24,000.

Why B is correct:

• Reducing balance depreciation retains 75% of the opening balance each year; after one full year on purchase, closing NBV is 75% of cost, so cost = NBV ÷ 0.75.

Why the others are wrong:

• A: 0.75 × 22,500 = 16,875 (understates NBV).
• C: 0.75 × 27,000 = 20,250 (overstates NBV).
• D: 0.75 × 20,000 = 15,000 (understates NBV).

Final answer: B