Question

Cost of machine $Rs.1,00,000$ scrap value $Rs.10,000$; life $4$ years. What will be the amount of depreciation according to sum of years digit method in the first year?

• A. $Rs.40000$
• B. $Rs.60000$
• C. $Rs.36000$
• D. $Rs.25000$

Answer 1

The correct option is C $Rs.36000$

Option C is correct.
Sum of years = 1+2+3+4 = 10
Original Cost = 1,00,000
Salvage Value = 10,000

= 90,000
Depreciation = 90,000*4/10
= 36,000.

Depreciation in the first year will be 36000.