Question

H Ltd. purchased a machinery on April 01, 2010 for Rs. 3,10,000. It is estimated that the machinery will have a useful life of 5 years after which it will have salvage value of Rs. 10,000. If the company follows Sum-of-the Years' Digits method of depreciation, charged during the year 2014-2015 was________.

• A. Rs. 1,00,000
• B. Rs. 80,000
• C. Rs. 60,000
• D. Rs. 20,000

Answer 1

The correct option is D Rs. 20,000

Sum of the years = 5 + 4 + 3 + 2 + 1

= 15

Depreciable value = Cost - salvage value

= RS-3,10,000 - RS- 10,000

= RS- 3,00,000

Depreciation for the 4th year(2014-15)

= depreciable amount x no. of years remaining

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sum of years

= 3,00,000 x 1

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15

= RS-20,000.