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Question

On 1st January, 2006 A Ltd purchased a machine for Rs 50,000 and spent Rs 4,000 on its carriage and Rs. 2000 on its installation. Its useful life is 10 years and scrap is Rs. 6000. Depreciation for the year under fixed installment method will be:

A
Rs. 4,600
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B
Rs. 5,000
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C
Rs. 4,800
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D
Rs. 4,500
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Solution

The correct option is B Rs. 5,000
Depreciation(SLM Method) = Cost - scrap value
---------------------------
Useful life
= 56,000 - 6,000
-----------------------
10
= RS. 5,000.


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