PRC-1 · Chapter 6 · Question 10 of 100
A machine was purchased for Rs. 250,000. Its estimated residual value is Rs. 50,000, and its useful life is 5 years. Using the straight-line method, what is the annual depreciation charge?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Rs. 40,000
Explanation
Straight-line depreciation = (Cost - Residual Value) / Useful Life = (250,000 - 50,000) / 5 = 200,000 / 5 = Rs. 40,000 per year.
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