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
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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%
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