Question

A machine was purchased for Rs. 30000 on 1.1.86. this is expected to last for 5 years. estimated scrap at the end of five years is Rs. 5,000 . Find out the rate of depreciation under the straightline method.​

Answer 1

Explanation:

Solution :

★ Annual Depreciation :

$\sf{\dfrac{(The \: Cost\: Of \: asset \: - \: Scrap \: Value)}{Useful \: life \: of \: asset}}$

$\sf{\longrightarrow \dfrac{(30,000 \: - \: 5,000)}{5}}$

$\sf{\longrightarrow{\dfrac{25,000}{5}}}$

$\sf{\longrightarrow{\dfrac{25,000}{5} \: = \: 5,000}}$

$\longrightarrow$ 5,000

Annual Depreciation = Rs 5,000

★ Rate of Depreciation =

$\sf{\dfrac{Amount \: of \: Depreciation}{Cost \: of \: asset}\times 100}$

$\longrightarrow{\sf{\dfrac{5,000}{30,000} \times 100}}$

$\longrightarrow$ 16.67

Rate of Depreciation = 16.67 %

∴ The Rate of Depreciation is 16.67 %.