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EMI, CAGR & Depreciation · Question 55 of 66

What is the machine's yearly depreciation?

Question 55

EasyOriginal question

A factory buys a machine for ₹6,00,000. It is expected to last 8 years and then fetch ₹40,000 as scrap. The factory uses the straight-line method.

What is the machine's yearly depreciation?

Options for question 55

Show the answer and explanation
CorrectNot quiteAnswer A

Correct answer: A

Explanation

  1. Spread the loss in value, cost minus scrap value, evenly over the 8 years.

  2. 6,00,000−40,0008=70,000\frac{6{,}00{,}000 - 40{,}000}{8} = 70{,}000 rupees.

Worth noting

₹75,000 ignores the ₹40,000 scrap value.

Concept
Straight-line depreciation
Typical time
90 s
Your time
—
The rule this testsLinear depreciation
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