Question

A firm purchased a plant for 50000,residual value is 10000,effective life of the plant is 5 years.calculate the amount of depreciation per year under straight line method.

Answer 1

Answer:

ANSWER

As per question

Cost of Plant = Rs 50,000

Useful life = 10 years

Residual value = Rs 5000

Depreciation = Cost-Residual value/Estimated useful life

=50,000-5,000/10

=45000/10

=4500

Also,

rate of depreciation = Annual depreciation/cost of plant x 100

= 4500/50,000 x 100

= 9%

Answer 2

Answer:

The amount of depreciation per year will be 8,000

Explanation:

Given :

Cost of plant = 50,000

Residual value = 10,000

Effective life of the plant in year = 5

To find :

The amount of depreciation per year (under straight line method)

Solution :

★  Annual Depreciation :

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

• Annual Depreciation :

⇒ $\sf{\dfrac{(Total \: cost \: - \: Residual \: value)}{Estimated \: useful \: life \: of \: asset}}$

⇒ $\sf{\dfrac{50,000 - 10,000}{5}}$

⇒ $\sf{\dfrac{40,000}{5}}$

⇒ $\sf{\dfrac{40,000}{5} = 8,000}$

Annual Depreciation = 8,000

Therefore,

The amount of depreciation per year will be 8,000