Question

1
A firm bought a machinery for Rs. 14,80,000 on 1" April, 2018 and
Rs. 1,20,000 is spent on its installation. Its useful life is estimated
to be of 5 years. Its estimated realisable or scrap value at the end
of the period was estimated at Rs. 80,000. Find out the amount of
annual Depreciation and rate of Depreciation.​

Answer 1

Answer:

I). Annual Depreciation = Rs 3,04,000

II). Rate of Depreciation = 19 %

Explanation:

Given :

Original cost of machinery = Rs 14,80,000

Installation charges = Rs. 1,20,000

Estimated useful life of Asset in years = 5

Scrap value = Rs. 80,000

Find :

I). The amount of annual Depreciation and II). Rate of Depreciation

Solution :

Calculate total cost of asset =

Original cost + Installation charges

⇒ RS 14,80,000 + Rs. 1,20,000

⇒ 16,00,000

Total cost of asset = Rs 16,00,000

★ I). Annual Depreciation :

Annual Depreciation = Total cost of asset - scrap value / Estimated useful life of asset

⇒ 16,00,000 - 80,000 / 5

⇒ 15,20,000 / 5

⇒ 3,04,000

Annual Depreciation = Rs 3,04,000

____________________________

★ II). Rate of Depreciation :

Rate of Depreciation = Amount of annual Depreciation / Total cost asset × 100

⇒ 3,04,000 / 16,00,000 × 100

⇒ $\frac{3,04,000}{16,00,000} \: \times \: 100$

⇒ 19

Rate of Depreciation = 19 %

The solution is :

Annual Depreciation = Rs 3,04,000

Rate of Depreciation = 19 %