PRC-1 · Chapter 6 · Question 28 of 100
A machine was purchased for Rs. 200,000 on 1 October 2020 with an expected residual value of Rs. 40,000. The straight-line method is used. As of 31 December 2022, the written down value is Rs. 128,000. What is the remaining useful life of the machine at 31 December 2022?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) 2.75 years
Explanation
Accumulated depreciation = 200k - 128k = 72,000. Time passed (1 Oct 2020 to 31 Dec 2022) = 2.25 years. Annual depreciation = 72,000 / 2.25 = 32,000. Total life = (200k - 40k) / 32k = 5 years. Remaining life = 5 - 2.25 = 2.75 years.
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