A company purchased a mine of Rs. 50,000. Its scrap value is Rs. 5,000 and expected working life is 9 years. 1,00,000 units were expected to be produced during its working life . Units produced in first 3 years are 7,000, 15,000 and 19,000 respectively, Calculate the amount of depreciation for the third year by using depletion method.

Rs. 3,150

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Rs. 8,550

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Rs. 3,000

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Rs. 6,750

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Solution

The correct option is A Rs. 8,550
Rate of depreciation = total cost of mine/total units
$= 50, 000 - 5000 / 1, 00, 000 = 45$ = 45%
Depreciation = rate of depreciation x quantity extracted during the year
= 45%x19000 = 8,550

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The correct option is A Rs. 8,550Rate of depreciation = total cost of mine/total units =50,000−5000/1,00,000=45 = 45%Depreciation = rate of depreciation x quantity extracted during the year = 45%x19000 = 8,550

The correct option is A Rs. 8,550
Rate of depreciation = total cost of mine/total units
$= 50, 000 - 5000 / 1, 00, 000 = 45$ = 45%
Depreciation = rate of depreciation x quantity extracted during the year
= 45%x19000 = 8,550