Question

7. 7. Original Cost of an asset is Rs.3,50,000;
its salvage value is Rs 25,000; useful life 5 years.
Annual Depreciation under Straight Line Method:
a. Rs 65,000 b. Rs85,000 c. Rs.35000 d. Rs. 17,500​

Answer 1

Explanation:

According to straight line method, the amount of yearl -depreciation is calculated as follows:

Depreciation = (Cost of asset - Scrap value) / Estimated life   and,

Depreciation = Rs. ( 50000 - 10000 ) / 10

Depreciation = Rs. 4000

Depreciation rate = (Depreciation expense / Cost of asset) * 100

Depreciation rate = (Rs. 4000 / Rs. 50000 ) * 100

Depreciation rate = 8%