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Question

On January 1, 2011, an asset was acquired for Rs30,000. Its useful life was expected to be 10 years and the salvage value is expected to be Rs0. After four years of use, the company realized the asset would be useful for only three more years. (In other words, the total useful life of the asset will be seven years instead of the original 10 years.) The company uses the straight-line method of depreciation. The Depreciation Expense in each of the years 2015, 2016, and 2017 will be Rs___


A

Rs 3000

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B

Rs 4000

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C

Rs 5000

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D

Rs 6000

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Solution

The correct option is D

Rs 6000


Depreciation as per SLM 3000 (30000/10)
Particulars Amount
Cost of asset 30000
Less:Depreciation for first 4 years 12000 (3000*4)
Value of asset at the end of 4 th year 18000
Depreciation in the 5th year 6000 (18000/3)

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