A Company purchased plant for Rs. 50000. The useful life of the plant is 10 years and the residual value is Rs. 5000. The management wants to depreciate it by straight line method. What will be the rate of depreciation?

8 %

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9 %

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10 %

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None of the above

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Solution

The correct option is A $9 %$
As per question
Cost of Plant = Rs 50,000
Useful life = 10 years
Residual value = Rs 5000
Depreciation = Cost-Residual value/Estimated useful life
=50,000-5,000/10
=45000/10
=4500

Also,
rate of depreciation = Annual depreciation/cost of plant x 100
= 4500/50,000 x 100
= 9%

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A Company purchased plant for Rs. 50000. The useful life of the plant is 10 years and the residual value is Rs. 5000. The management wants to depreciate it by straight line method. What will be the rate of depreciation?

The correct option is A 9%As per questionCost of Plant = Rs 50,000Useful life = 10 yearsResidual value = Rs 5000Depreciation = Cost-Residual value/Estimated useful life=50,000-5,000/10=45000/10=4500Also,rate of depreciation = Annual depreciation/cost of plant x 100= 4500/50,000 x 100= 9%