Question

The value of an asset is Rs. 50,000. Its working life is 10 years. Firm uses sum of years digits method for providing depreciation. What will be the amount of depreciation for second year?

• A. Rs. 5,000
• B. Rs. 9,091
• C. Rs. 4,500
• D. Rs. 8,181

Answer 1

The correct option is D Rs. 8,181

$S=n(n+1)/2$ where,
$S=$ Sum of years
$n=$ number of years of useful life of assets
$S=10(10+1)/2=110/2=55$
Depreciation for second year $=9/55\times 50000=8181$