Question

Purchase Price of Machine Rs. 80,000, Installation charges Rs. 20,000, Residual value Rs. 40,960 useful life 4 years. The annual depreciation under SLM is_______.

• A. Rs. 25,000
• B. Rs. 20,000
• C. Rs. 14, 760
• D. Rs. 9,760

Answer 1

Answer: (C)

Rs. 14, 760

For Calculating the Annual Depreciation Under SLM is

Purchase Price of Machine Rs. 80,000 + Installation charges Rs. 20,000 - Residual value Rs. 40,960 = Depreciable asset cost of Rs 59040

4-year useful life = 25% depreciation rate per year

25% depreciation rate x 59040 depreciable asset cost = Rs 14, 760 annual depreciation.