Question

Calculate the annual percentage depreciation of a machine using the constant percentage method,of purchasing cost is rs 12000 and scrap

Answer 1

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Answer:-⤵

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1. The Straight Line Method:

↪ This method provides depreciation by means of equal periodic charges over the assumed useful life of the asset.

↪It means one should deduct the scrap value of the asset from its original value and divide the remainder by the number of years of its economic life which gives annual depreciation charges.

↪Let Ci = initial cost of a machine.

↪Cs = scrap value of the machine.

↪N = number of years of economic or useful life of the machine.

↪D = depreciation charges per year.

↪Then D = Rs Ci / Cs / N

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