Question

Hiral Ltd charges depreciation on its asset at 5% under straight line method. If annual depreciation is Rs.6000 then find out cost price of machine ?​

Answer 1

Given :

Rate of Depreciation : 5%

Annual Depreciation : 6,000

To Find :

Cost Price Of Asset

Formula To Find Depreciation :

${\underline{\boxed{\rm{Depreciation = Cost \: Price \: \times \frac{Rate \: of \: Depreciation}{100} }}}}$

Solution :

$\dashrightarrow \sf \: Depreciation \: =Cost \: Price \: \times \frac{Rate}{100}$

Let, Cost Price be x ,

$\sf \dashrightarrow \: 6000 = x \times \cfrac{5}{100}$

$\dashrightarrow \sf \: \cfrac{6000}{x} = \cfrac{5}{100}$

$\sf\dashrightarrow \: 5 \times x = 6000 \times 100$

$\sf \dashrightarrow \: 5x = 600000$

$\sf\dashrightarrow \: x = \frac{600000}{5}$

$\sf\dashrightarrow \: x = 120000$

Price = 1,20,000

Verification :

$\sf\to \: Depreciation \: = Cost \: Price \times \frac{Rate}{100}$

$\to \sf \: 6000 = 120000 \times \cfrac{5}{100}$

$\sf\to \: 6000 = \cfrac{600000}{100}$

$\sf \to \: 6000 = 6000$

$\therefore \sf Cost \: Price \: of \: Machine \: = 120000$

Answer 2

Depreciation = face value of asset *percentage of depreciation/100
6,000=face value of asset * 5/100
Face value of asset =6,000*100/5
=6,00,000/5
=1,20,000