A machinery is depreciated by Rs. 2000 every year. Which method is being used to calculate depreciation?

Written Down value method

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Straight line method

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

Sum of years Digit method

No worries! We‘ve got your back. Try BYJU‘S free classes today!

None of these

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Open in App

Solution

The correct option is C Straight line method
This is the earliest and one of the widely used methods of providing depreciation. This method is based on the assumption of equal usage of the asset over its entire useful life. It is called straight line for a reason that if the amount of depreciation and corresponding time period is plotted on a graph, it will result in a straight line.
It is also called fixed instalment method because the amount of depreciation remains constant from year to year over the useful life of the asset. According to this method, a fixed and an equal amount is charged as depreciation in every accounting period during the lifetime of an asset.

Suggest Corrections

Similar questions

Q. If a company follows the written down value method of depreciating machinery year after year, it is due to __________.

Q. Under written down value method, depreciation every year.

Q. Rate of depreciation under written down value method is 15% p.a. Cost of the machinery is Rs. 10,00,000. Residual value at the end of useful life is Rs. 20,000. Depreciation for the first year will be:

A truck is bought by the company for Rs. 2,75,000. It is estimated that the salvage value will be Rs. 10,000 at the end of its useful life which is 5 years. Calculate the amount of depreciation to be charged every year under SLM method.

Q. Under written down value method the depreciation amount ___________________ every year.

Join BYJU'S Learning Program