Question

On 1^st September 2022, A Ltd. purchased a machine costing Rs. 8,00,000. Depreciation was to be charged @ 15% p.a. by straight-line method. What amount of depreciation will be charged for the year ending on March 31, 2023?

• A. Rs. 80,000
• B. Rs. 70,000
• C. Rs. 60,000
• D. Rs. 90,000

Hint:

In the Straight-Line Method, depreciation is calculated on the original cost of the asset, irrespective of its age.

Answer 1

The Correct Option is B

Under the Straight-Line Method (SLM), depreciation is calculated as:

Depreciation = Cost × Rate × Time

Given: Cost = Rs. 8,00,000, Rate = 15%, Time = 7 months (September to March):

Depreciation = 8,00,000 × \(\frac{15}{100}\) × \(\frac{7}{12}\)

Depreciation = 8,00,000 × 0.0875 = Rs. 70,000