Question

A machine is purchased for Rs. 80,000 and its installation charges are Rs. 10,000. If its scrap value is Rs. 6,000 and effective life is 10 years, its yearly depreciation as per fixed installment method will be​

Answer 1

Answer:

8,400

Explanation:

Purchasing cost Rs 80,000

Add-Installation charges. Rs 10,000

Total cost. Rs 90,000

Less-Scrap value. Rs 6,000

Rs 84,000

Now since in slm method or fuxed installment method depreciation anount remains same

Rs 84,000 /10 = 8,400.

Yearly depreciation would be Rs 8,400.

Answer 2

Concept:-

Depreciation has been defines as "the diminution in the utility or value of an asset, due to natural wear and tear, exhaustio of the subject matter, effluxion of time accident, etc. There are various methods of calcuating depreciation.

Given:-

Given that "A machine is purchased for Rs. $80,000$ and its installation charges are Rs. $10,000$. If its scrap value is Rs. $6,000$ and effective life is $10$ years".

Find:-

We need to find the "depreciation as per fixed installment method will be​."

Solution:-

Formula for depreciation when scrap value is given and rate of depreciation is not given is:

Depreciation $= (Original cost - Scrap value) / Useful life of asset$

In the given question,

Original cost of asset $= Rs. 80000$

Scrap value$= Rs. 6000$

useful life of asset $= 10$ Years

Depreciation$= Rs. (80000 - 6000) / 10$

Depreciation $= Rs. 7400$

Hence, its yearly depreciation as per fixed installment method will be​ Rs. $7400$.

#SPJ3