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      Question

      A company purchased a machinery for Rs.4,50,000. The

      machine is expected to have a useful life is 7 years after which it can salvage a value of Rs.30,000. If the company charges depreciation at 10% using the Straight Line Method, what will be the value of depreciation for 3rd year?
      A 40,000 Correct Answer Incorrect Answer
      B 42,000 Correct Answer Incorrect Answer
      C 60,000 Correct Answer Incorrect Answer
      D 64,285 Correct Answer Incorrect Answer
      E 72,465 Correct Answer Incorrect Answer

      Solution

      As per Straight line method, Depreciation = (Cost - Salvage Value)/ Estimated useful life Here Cost = 4,50,000 and Salvage Value = 30,000, Therefore Depreciation = (4,50,000 – 30,000)/7 = 60000.

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