Subtopic: Cost analysis of implements and tractors
Question Statement:
A vertical conveyor reaper costing Rs. 75000 has a useful life of 8 years. Taking salvage value of the machine as 10% of the initial cost, the depreciated value after half of its useful life following straight line method will be Rs. ________.
Official Answer Key:
41250 to 41250
Step-by-Step Solution & Explanation
Salvage value, S = 0.10 × 75,000 = Rs. 7,500.
Annual depreciation (straight line) = (P − S)/L = (75,000 − 7,500)/8 = Rs. 8,437.50/year.
After half the useful life (4 years): Depreciated value = P − 4×(annual depreciation) = 75,000 − 4(8,437.5) = 75,000 − 33,750 = Rs. 41,250.
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