Multiple choice

A machine costing Rs. 4,50,000 and having scrap value of 20% of cost after 5 years was purchased on 31 July, 2009. It is to be depreciated under straight line method. The depreciation to be charged for year ending 31 March, 2010 will be

  1. Rs. 48,000

  2. Rs. 72,000

  3. Rs. 54,000

  4. Rs. 42,000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Annual depreciation = (4, 50, 000 - 90, 000)/5 = 72, 000. Depreciation for 31 July to 31 March i.e. 8 months = 72, 000*8/12 = Rs.48, 000 Rs.72, 000 is depreciation for the full year, Rs.54, 000 for 9 months and 42, 000 for 7 months.

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