Question
A vehicle purchased for ₹8,00,000 has an estimated
useful life of 5 years and a residual value of ₹1,00,000. Using the Straight-Line Method, the depreciation for the 2nd year will be:Solution
Annual Depreciation = (Cost – Residual Value) / Useful Life = (8,00,000 – 1,00,000) / 5 = ₹1,40,000. Under SLM, depreciation is constant every year.
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