PRC-1 · Chapter 6 · Question 13 of 100
If an entity buys a machine with an expected total production capacity of 100,000 units, costs Rs. 550,000, and has a residual value of Rs. 50,000, what is the depreciation charge in a year where 15,000 units are produced?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Rs. 75,000
Explanation
Depreciation per unit = (550,000 - 50,000) / 100,000 = Rs. 5 per unit. Depreciation for 15,000 units = 15,000 x 5 = Rs. 75,000.
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