Question

A Company purchased a machinery on April 01, 2000 for Rs $1,50,000$. It is estimated that the machinery will have a useful life of 5 years after which it will have no salvage value. The depreciation charged during the year 2004-05 was ______________.

• A. Rs. $50,000$
• B. Rs. $40,000$
• C. Rs. $30,000$
• D. Rs. $10,000$

Answer 1

Answer: (C)

Rs. $30,000$

Option C is correct.
In straight line method, depreciation charged remains same for every year. Depreciation is calculated as:
Cost price - salvage value / Estimated life of depreciation

1,50,000 - 0 /5
= 30,000

Depreciation charged every year = 30,000.