Question

Calculation of Rate of Depreciation in Straight Line Method
5. A company purchased a plant for * 4,00,000. The useful life of the plant is 10 years and the
estimated scrap value is 340,000. Determine the rate of depreciation when the management​

Answer 1

Answer:

10th

Elements of Book Keeping and Accountancy

Depreciation

Need and Methods of Charging Depreciation Using Straight Line Method

A Company purchased plant f...

ACCOUNTANCY

A Company purchased plant for Rs. 50000. The useful life of the plant is 10 years and the residual value is Rs. 5000. The management wants to depreciate it by straight line method. What will be the rate of depreciation?

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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%