A machinery having a residual value of Rs. 5,000 was purchased on 1.1.1998 for Rs. 1,00,000 and was depreciated 9.5% on a straight line method. On 1.1.1998, it was estimated that it useful life has been reduced to eight years. Under the changed circumstances, the annual depreciation charges for the year 1991 and onwards will be:

Rs. 11,875

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Rs. 13,300

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Rs. 9,500

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Rs. 12,500

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Solution

The correct option is A Rs. 11,875
Depreciation = Original value - Residual value / Useful life
= 100000 - 5000 / 8
= 11875 Rs

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The correct option is A Rs. 11,875Depreciation = Original value - Residual value / Useful life = 100000 - 5000 / 8 = 11875 Rs

The correct option is A Rs. 11,875
Depreciation = Original value - Residual value / Useful life
= 100000 - 5000 / 8
= 11875 Rs