Question

A company buys a machine worth ₹65000, which has a salvage value of ₹5000. The annual depreciation cost is ₹10000 based on the straight-line depreciation method. The useful life (in years) of the machine is \(\underline{\hspace{2cm}}\) (in integer).

Hint:

In straight-line depreciation, useful life = (Cost – Salvage Value) ÷ Annual Depreciation.

Answer 1

Correct Answer: 6

Using straight-line depreciation: \[ \text{Annual Depreciation} = \frac{\text{Cost} - \text{Salvage Value}}{\text{Useful Life}} \] Substitute values: \[ 10000 = \frac{65000 - 5000}{L} \] \[ 10000 = \frac{60000}{L} \] \[ L = \frac{60000}{10000} = 6 \] Thus, the useful life of the machine is: \[ 6\ \text{years} \]