A workshop has two machines, both depreciated by the straight line method. Machine P cost Rs. 3,00,000, has a useful life of 9 years and a scrap value of Rs. 30,000. Machine Q cost Rs. 2,50,000, has a useful life of 6 years and a scrap value of Rs. 10,000. The total annual depreciation of the two machines is
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Rs. 70,000
By the straight line method, each machine is depreciated by \( \displaystyle D = \frac{C - S}{n} \) every year.
Machine P:
\( \displaystyle D_P = \frac{300000 - 30000}{9} = \frac{270000}{9} = 30000 \)
Machine Q:
\( \displaystyle D_Q = \frac{250000 - 10000}{6} = \frac{240000}{6} = 40000 \)
Total:
\( 30000 + 40000 = 70000 \)