A machine has an initial value of Rs. 5000, service life of 5 years and final salvage value of Rs. 1000. The annual depreciation cost by straight line method is Rs______________?
Correct answer: C. 800
- A. 300
- B. 600
- C. 800
- D. 1000
Explanation
Straight-line depreciation is spread evenly over the depreciable amount: (5000 - 1000)/5 = Rs. 800 per year. The salvage value is therefore deducted before dividing by the service life.
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