Back to Questions
SSC Financial and Cost Accounting P-1 QUESTION #6059
Question 1

A machine has an original cost of Rs. 19,00,000 and installation charges of Rs. 1,00,000. Its useful life is 5 years and residual value is Rs. 40,000. Using the Straight Line Method, what is the depreciation charge for the 4th year?

  • Rs. 372,000
  • Rs. 400,000
  • Rs. 392,000✔️
  • Rs. 352,000
Correct Answer Explanation

Total cost $= 19{,}00{,}000 + 1{,}00{,}000 = Rs.\ 20{,}00{,}000$

Depreciable amount $= 20{,}00{,}000 - 40{,}000 = Rs.\ 19{,}60{,}000$

Annual depreciation (SLM) $= \dfrac{19{,}60{,}000}{5} = Rs.\ 3{,}92{,}000$

Under the Straight Line Method, depreciation is equal every year. So the 4th year's depreciation is also Rs. 3,92,000. There is no change between years in SLM.