Question

Date of Purchase - 1st July, Purchase Price of Machine Rs. 80,000, Installation Charges Rs. 20,000, Residual Value Rs. 40,960, Useful life 4 years, Accounting year -Financial year. Date when Machine was put to use- 1st Oct.
The depreciation under SLM for the first year will be:-

• A. Rs. 12,500
• B. Rs. 11, 070
• C. Rs. 7,380
• D. None of these

Answer 1

Answer: (C)

Rs. 7,380

Depreciation(SLM basis) = Depreciable value - Residual value

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Useful life.

= 1,00,000 - 40,960

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4

= 14,760 x 6/12 ( October 1st to 31st march)

= RS-7,380.