Question

A machine costing ₹1,00,000 has a scrap value of ₹10,000 after 5 years. The rate of depreciation charged under

straight line method will be: (1)

(a) 18% (b) 20% (c) 22.22% (d) None of these.​

Answer 1

Answer:

Given :

• Cost of machine - 1,00,000

• Scrap Value - 10,000

• Estimated Life - 5 years.

To Find :

• Rate of Depreciation - ?

Formulae To Find :

${\boxed{\frak {\underline {depreciation = \frac{original \: cost \: - scrap \: value}{estimted \: life} }}}}$

Solution :

$\implies \sf \frac{original \: cost \: - scrap \: value}{estimated \: life}$

$\implies \sf \: \frac{100000 - 10000}{5}$

$\sf \implies \: \frac{90000}{5}$

$\sf \implies \: 18000$

$\implies \bf \: 18000 = 18\%$

$\therefore \sf rate \: of \: Depreciation \: = 18\%$

= ( a ) = 18%

Let's Check Depreciation :

• Depreciation Rate - 18%

$\to \sf 100000 \times \frac{18}{100}$

$\to \sf \: \frac{1800000}{100}$

$\to \sf \: 18000$

Thus Solved !!

Factors Affecting Depreciation :

• Original Cost of Asset

• Scrap Value

• Estimated Use ful life

• Original Cost of Asset :

It refers to the purchase price and all expenses of acquiring and installing the asset.

• Scrap Value :

It is the amount which is expected to be realised on its disposal when its becomes unserviceable.

• Estimated Useful Life :

It refers the period for which a fixed asset can be effective service to the firm.