Question

An asset is acquired for ₹1,000,000 with useful life 5 years and residual value ₹100,000. Under the sum-of-the-years’-digits (SYD) method, what is Year 1 depreciation?

• A. ₹200,000
• B. ₹100,000
• C. ₹400,000
• D. ₹300,000

Answer 1

Answer:

D. ₹300,000

• Under SYD, denominator = 15

• Year 1 numerator = 5

• and base=900000

• Thus 900000 × 5 / 15 = 300000

• Recognizing the pattern of declining fractions improves matching of expenses with economic benefits when assets are more productive early in life.