Question

A company purcahsed a plant for ruppee 400000. The useful life of the plant is 10 year and the estimated scrap value is rupee 40000. Determine the rate of deprecation when the management wants to depreciate it by strainght line method

Answer 1

cost of the plant = 4,00,000

scrap value = 40000

useful life of plant = 10 years

annual depreciation = (400000-40000) / 10

= 36000

rate of depreciation = annual depreciation/( cost of asset- scrap value) * 100

36000/3,60,000 * 100 = 10%