Question

On the basis of the information given below, answer the following question. NS.Ltd. purchased a lease- hold property on 1st April 2010 for 5 years at a cost of Rs 7,50,000. It is decided to write off the lease by annuity method presuming the rate of interest at 14%.The annuity table shows that annual amount necessary to write - off Rs 1 in 5 years at 14% is Rs 0.291284. Calculations to be made to the nearest rupee.

Depreciation to be provided for each year = ?

• A. $2,63,463$
• B. $2,48,463$
• C. $2,33,463$
• D. $2,18,463$

Answer 1

The correct option is D $2,18,463$

Depreciation under sinking fund method = value of machine x annuity value

= RS-7,50,000 x 0.291284

= RS-2,18,463.