A machine costing Rs.2,00,000 has a useful life of 5 years.The estimated scrap value is Rs.20,000. By using straight line method, the annual depreciation is
A machine costing Rs.2,00,000 has a useful life of 5 years.The estimated scrap value is Rs.20,000. By using straight line method, the annual depreciation is
Solution
✅ Correct Option: 3
Given Information:
Cost of machine = Rs. 2,00,000
Useful life = 5 years
Scrap value = Rs. 20,000
The straight line method of depreciation allocates an equal amount of depreciation each year over the useful life of the asset.
Annual Depreciation
Total Depreciation Original Cost Scrap Value
Total Depreciation
Total Depreciation
Annual Depreciation
Annual Depreciation
Therefore, the annual depreciation is Rs. 36,000.
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