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?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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