Question

N Ltd. purchased a machinery on April 1, 2010 for Rs 6,00,000. It is estimated that the machinery will have a useful life of 5 years after which it will have no salvage value. If the company follows sum of year digit method of depredation, the amount of depreciation charged during the year 2014-2015 was ____________.

• A. Rs 40,000
• B. Rs 1,20,000
• C. Rs 1,90,000
• D. Rs 2,00,000

Answer 1

The correct option is A Rs 40,000

As per sum of year digit method of depreciation,

Useful life = 5 years

Cost = Rs 6,00,000

the digits in the years of the asset's useful life are summed: 1 + 2 + 3 + 4 + 5 = 15.

Calculation of amount of depreciation during the year 2014-2015 is

=1/15 x 600000

= 40,000