Company XYZ uses the straight line
method of depreciation for all its fixed
assets. On 1 January it bought a machine
on hire purchase. The cash price was
Rs.150.000and the interest for the year is
Rs. 16,500. The estimated useful life of
the machine is five years with no residual
value. What is the charge for depreciation
for the year ended 31 December?
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Answer:
Depreciation
= cost - salvage Value / useful life
= 150,000-0 / 5
= 150,000/5
= 30,000
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