A piece of machinery costing Rs 25000 is expected to have a useful life of 4 years and a scrap value of zero. Find the annual depreciation charge using the sum of the years digits method.

₹10000, ₹ 7000, ₹ 5000 and ₹ 2000

The correct answer is option (4) : ₹10000, ₹ 7500, ₹ 5000 and ₹ 2500

Given that original cost of annual asset $=₹25000$

Useful life = 4 years

Sum of years digits = $ 1+ 2+ 3 + 4 = 10$

Depreciation schedule

So, annual depreciation are ₹10000, ₹7500, ₹5000 and ₹ 2500