Question

xyz ltd has a revenue of Rs. 8 lacs and it has provided for depreciation at 10% slm method. it has cash expenses of Rs. 2 lacs the taxes are 50% p.a. show the net earning on accounting approach basis and cash flow basis.

Answer 1

Purchase cost of $60,000 – estimated salvage value of $10,000 = Depreciable asset cost of $50,000.

1 / 5-year useful life = 20% depreciation rate per year.

20% depreciation rate x $50,000 depreciable asset cost = $10,000 annual depreciation.