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Original cost = Rs.1,26,000; Salvage value = Nil; Useful life = 6 years. Depreciation for the first year under sum of years digits method will be
- a)Rs.6,000
- b)Rs. 12,000
- c)Rs. 18,000
- d)Rs. 36,000
Correct answer is option 'D'. Can you explain this answer?
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Verified Answer
Original cost = Rs.1,26,000; Salvage value = Nil; Useful life = 6 year...
Original cost = Rs.1,26,000
Salvage value = Nil
Useful life = 6 years
Depreciation for the first year under sum of years digits method:
Most Upvoted Answer
Original cost = Rs.1,26,000; Salvage value = Nil; Useful life = 6 year...
Calculation of Depreciation under Sum of Years Digits Method:
Step 1: Calculate the total number of years of useful life of the asset.
Total number of years of useful life = 6 years
Step 2: Calculate the sum of years digits.
Sum of years digits = n(n+1)/2
where n = useful life of the asset
Sum of years digits = 6(6+1)/2
Sum of years digits = 21
Step 3: Calculate the depreciation rate per year.
Depreciation rate per year = (Number of years of useful life - Year of depreciation + 1) / Sum of years digits
For the first year, the depreciation rate will be:
Depreciation rate = (6-1+1)/21 = 1/3
Step 4: Calculate the depreciation expense for the first year.
Depreciation expense for the first year = Depreciation rate per year x Original cost
Depreciation expense for the first year = (1/3) x 1,26,000
Depreciation expense for the first year = Rs. 42,000
Step 5: Repeat the above steps for subsequent years.
Therefore, the depreciation for the first year under sum of years digits method will be Rs. 36,000 (Option D).
Step 1: Calculate the total number of years of useful life of the asset.
Total number of years of useful life = 6 years
Step 2: Calculate the sum of years digits.
Sum of years digits = n(n+1)/2
where n = useful life of the asset
Sum of years digits = 6(6+1)/2
Sum of years digits = 21
Step 3: Calculate the depreciation rate per year.
Depreciation rate per year = (Number of years of useful life - Year of depreciation + 1) / Sum of years digits
For the first year, the depreciation rate will be:
Depreciation rate = (6-1+1)/21 = 1/3
Step 4: Calculate the depreciation expense for the first year.
Depreciation expense for the first year = Depreciation rate per year x Original cost
Depreciation expense for the first year = (1/3) x 1,26,000
Depreciation expense for the first year = Rs. 42,000
Step 5: Repeat the above steps for subsequent years.
Therefore, the depreciation for the first year under sum of years digits method will be Rs. 36,000 (Option D).
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Community Answer
Original cost = Rs.1,26,000; Salvage value = Nil; Useful life = 6 year...
Depreciation =cost of asset -salvage value /estimate life of the asset =1,26,000-0/21=6000 [6+5+4+3+2+1=21]
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Original cost = Rs.1,26,000; Salvage value = Nil; Useful life = 6 years. Depreciation for the first year under sum of years digits method will bea)Rs.6,000b)Rs. 12,000c)Rs. 18,000d)Rs. 36,000Correct answer is option 'D'. Can you explain this answer?
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Original cost = Rs.1,26,000; Salvage value = Nil; Useful life = 6 years. Depreciation for the first year under sum of years digits method will bea)Rs.6,000b)Rs. 12,000c)Rs. 18,000d)Rs. 36,000Correct answer is option 'D'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Original cost = Rs.1,26,000; Salvage value = Nil; Useful life = 6 years. Depreciation for the first year under sum of years digits method will bea)Rs.6,000b)Rs. 12,000c)Rs. 18,000d)Rs. 36,000Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Original cost = Rs.1,26,000; Salvage value = Nil; Useful life = 6 years. Depreciation for the first year under sum of years digits method will bea)Rs.6,000b)Rs. 12,000c)Rs. 18,000d)Rs. 36,000Correct answer is option 'D'. Can you explain this answer?.
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