Question

A machine purchased for \( ₹1,50,000 \) has a residual value of \( ₹30,000 \) and useful life of 6 years. Annual depreciation under Straight Line Method will be:

• A. \( ₹15,000 \)
• B. \( ₹18,000 \)
• C. \( ₹20,000 \)
• D. \( ₹25,000 \)

Hint:

SLM provides equal depreciation expense every year throughout the useful life of the asset.

Answer 1

The Correct Option is C

Concept: Under Straight Line Method: \[ \text{Annual Depreciation} = \frac{\text{Cost} - \text{Residual Value}}{\text{Useful Life}} \]

Step 1: Substitute the values into the formula.
\[ \text{Depreciation} = \frac{1,50,000 - 30,000}{6} \] \[ = \frac{1,20,000}{6} = 20,000 \] Hence, \[ \boxed{₹20,000} \]