Question

Original cost of a machine was Rs. $2,52,000$; Salvage value was $12,000$. Useful Life was 6 years, Annual depreciation under Straight Line Method will be __________.

• A. $Rs.42,000$
• B. $Rs.40,000$
• C. $Rs.30,000$
• D. $Rs.28,000$

Answer 1

The correct option is B $Rs.40,000$

Under straight line method of depreciation, depreciation expense is calculated as below:

Depreciation = (Cost of Asset - Scrap value)/ Estimated useful life

Depreciation = (Rs. 252000 - Rs. 12000) / 6 years

Depreciation = Rs. 240000 / 6 years

Depreciation = Rs. 40000