A machine costs Rs. 500,000, has a residual value of Rs. 50,000, and a useful life of five years. What is its annual straight-line depreciation?
Correct answer: A. Rs. 90,000
- A. Rs. 90,000
- B. Rs. 80,000
- C. Rs. 100,000
- D. Rs. 110,000
Explanation
Straight-line depreciation equals depreciable cost divided by useful life. The calculation is (Rs. 500,000 minus Rs. 50,000) divided by 5, giving Rs. 90,000 per year.
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Financial statements present a business's financial performance and position through the income statement, statement of financial position, cash flow statement and changes in equity. Questions involve preparing and interpreting these statements, adjusting entries, depreciation, closing inventory, accrued and prepaid items, and distinguishing profit from cash flow.
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