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Answer:
calculate the depreciation for the machinery over a period of six years.
Given information:
- Cost of machinery: Rs.260,000
- Transportation and installation expenses: Rs.20,000
- Useful life of the asset: 6 years
- Estimated realizable value after 6 years: Rs.10,000
To calculate depreciation, we’ll use the Straight Line Method (SLM):
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Determine the total cost of the machinery:
- Cost of machinery + Transportation and installation expenses = Rs.260,000 + Rs.20,000 = Rs.280,000
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Calculate annual depreciation:
- Annual depreciation = (Cost of machinery – Estimated realizable value) / Useful life
- Annual depreciation = (Rs.280,000 – Rs.10,000) / 6
- Annual depreciation = Rs.270,000 / 6
- Annual depreciation = Rs.45,000
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Depreciation for six years:
- Total depreciation = Annual depreciation × Number of years
- Total depreciation = Rs.45,000 × 6
- Total depreciation = Rs.270,000
Therefore, the total depreciation for the machinery over six years is Rs.270,000.
Now we organize the depreciation calculations in a tabulated format:
Item | Amount (Rs.) |
---|---|
Cost of machinery | 260,000 |
Transportation and installation expenses | 20,000 |
Total cost of machinery | 280,000 |
Estimated realizable value after 6 years | 10,000 |
Useful life of the asset | 6 years |
Annual depreciation | 45,000 |
Total depreciation for 6 years | 270,000 |
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