Question

A firm bought a machine for Rs. 6,00,000, Paid installation change for Rs. 1,00,000, and Brokerage and Carrying charges Rs. 1,00,000 on 1st April 2018. It's useful life estimated to be of Rs. 5 years. Its estimated realisable value at the end of the period was estimated at Rs. 40,000. Find the annual depreciation and rate of depreciation.

Answer 1

Answer:

Determination of the amt. Of depreciation :-

Depreciation = cost + charges - estimated realizable or scrap value ÷ no. Of years of expected useful life.

• Depreciation = 6,00,000 (machinery) + 1,00,000(installation charges) + 1,00,000 (brokage or carriage charges) - 40,000 (scrap value) ÷ 5 years = 1,52,000

Rate of depreciation = annual Depreciation / cost of assets × 100

1,52,000 / 8,00,000 (machinery + installation charges + brokage charges) × 100 = 19%.

Thanks.