Question

A machine costing ₹500,000 has an estimated residual value of ₹20,000 and a useful life of 10 years. Under straight-line depreciation, what is the annual depreciation charge?

• A. ₹48,000
• B. ₹50,000
• C. ₹40,000
• D. ₹52,000

Answer 1

Answer:

A. ₹48,000

• Under straight-line, annual depreciation equals the depreciable amount divided by the useful life.

• The depreciable amount is cost minus residual value:

• Depreciable amount = 500000 − 20000 = 480000

• Annual depreciation is 480000 / 10 = 48000