Question

Machine is depreciated at the rate 20% on reducing balance. The original cost of the machine was ₹100000 rupee and the its ultimate scrap value was ₹30000.The effective life of the machine is​

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Answer 1

Step-by-step explanation:

The original cost of the machine = 100000

The scrap value of  the machine = 30000  

Value of the machine = ( 100000 - 30000 )

                                   = 70000

Depreciation of the machine for the first year = ( 70000 * 20 % )

                                                                            = 14000

So, the effective life of the machine is = ( 70000 /  14000 )

                                                                = 5 years