Multiple choice

A machine costing Rs. 2,00,000 having scrap value of Rs. 50,000 after 5 years is to be depreciated under sum of digit method. The depreciation to be charged in the 2nd year will be

  1. Rs. 20,000

  2. Rs. 40,000

  3. Rs. 10,000

  4. Rs. 30,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Sum of digits = 5 + 4 + 3 + 2 + 1 = 15 Depreciation in 2nd year = 4/15 of (2, 00, 000 - 50, 000) = Rs. 40, 000 Rs. 20, 000 is the depreciation for the 4th year, Rs. 10, 000 in the last year. Rs. 30, 000 is the depreciation as per straight line method.

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