PRC-1 · Chapter 6 · Question 54 of 100
Normal Limited purchased premises for Rs. 16 million with no salvage value and a useful life of 45 years. Using the sum-of-the-years'-digits method, what is the exact depreciation charge for the fourth year?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Rs. 6,492,754
Explanation
Sum of digits = 45 x (45+1) / 2 = 1,035. The sequence for the first four years is 45, 44, 43, 42. For Year 4, the fraction is 42 / 1,035. Depreciation = 16,000,000 x (42/1035) = Rs. 6,492,754.
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