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Question
Original cost = Rs 1,26,000 ; Salvage value = Nil; Useful life = 6 years. Depreciation for the first year under sum of years digits method will be_____.
Original cost = Rs 1,26,000 ; Salvage value = Nil; Useful life = 6 years. Depreciation for the first year under sum of years digits method will be_____.
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Solution
The correct option is B 36,000
Sum of years = 6 + 5 + 4 + 3 + 2 + 1 = 21.Depreciable amount = 1,26,000.Depreciation = depreciable amount x no. of years remaining -------------------------------------------------------------------- sum of years remaining = 1,26,000 x 6 -------------------- 21 = RS-36,000.
Sum of years = 6 + 5 + 4 + 3 + 2 + 1
= 21.
Depreciable amount = 1,26,000.
Depreciation = depreciable amount x no. of years remaining
--------------------------------------------------------------------
sum of years remaining
= 1,26,000 x 6
--------------------
21
= RS-36,000.
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