On 1st April 2024, person 'X' purchased a machinery costing ₹ 65000 and spent ₹ 10000 on its installation. The estimated effective life of the machinery is 5 years with a scrap value of ₹ 10000. The annual depreciation using the straight-line method with the accounting year ending on 31st March 2025 is:
On 1st April 2024, person 'X' purchased a machinery costing ₹ 65000 and spent ₹ 10000 on its installation. The estimated effective life of the machinery is 5 years with a scrap value of ₹ 10000. The annual depreciation using the straight-line method with the accounting year ending on 31st March 2025 is:
Solution
The total cost of machinery includes both the purchase price and installation cost.
Total Cost
Total Cost
The depreciable amount is the difference between the total cost and the scrap value.
Depreciable Amount
Depreciable Amount
Under the straight-line method, the depreciable amount is divided equally over the useful life of the asset.
Annual Depreciation
Annual Depreciation
Annual Depreciation
Therefore, the annual depreciation is ₹13,000.
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