Consider a piece of machinery costing Rs. $30, 000$ with an estimated life of 10 years. At the end of this time it can be sold for Rs. $3, 000$ . Using the equal installment method the annual charge against profits would be ________.

R s .3, 300

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R s .3, 000

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R s .2700

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R s .300

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Solution

The correct option is C $R s .2700$
Calculation of depreciation when scrap value and estimated useful life of asset is given or under equal installment method:
Depreciation = (Cost of asset - Scrap Value)/ Estimated useful life
Depreciation = Rs. (30000 - 3000) / 10 years
Depreciation = Rs. 27000 / 10 years = Rs. 2700

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Consider a piece of machinery costing Rs. 30,000 with an estimated life of 10 years. At the end of this time it can be sold for Rs. 3,000. Using the equal installment method the annual charge against profits would be ________.

Consider a piece of machinery costing Rs. $30, 000$ with an estimated life of 10 years. At the end of this time it can be sold for Rs. $3, 000$ . Using the equal installment method the annual charge against profits would be ________.