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The useful life of a machine is estimated to be 10 years and cost Rs. 10,000. Rate of depreciation is 10% p.a. The scrap value at the end of its life is?
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The useful life of a machine is estimated to be 10 years and cost Rs. ...
Understanding Depreciation
Depreciation is the reduction in the value of an asset over time, primarily due to wear and tear. In this case, we are dealing with a machine that has a cost of Rs. 10,000 and a useful life of 10 years, with a depreciation rate of 10% per annum.
Calculating Annual Depreciation
- The annual depreciation can be calculated using the formula:
Annual Depreciation = Cost x Rate of Depreciation
- For our machine:
Annual Depreciation = Rs. 10,000 x 10% = Rs. 1,000
Total Depreciation Over Useful Life
- Over the useful life of 10 years, the total depreciation will be:
Total Depreciation = Annual Depreciation x Useful Life
- Thus:
Total Depreciation = Rs. 1,000 x 10 = Rs. 10,000
Calculating Scrap Value
- Scrap value is the estimated residual value of an asset after its useful life.
- To find the scrap value, we use the formula:
Scrap Value = Cost - Total Depreciation
- In this scenario:
Scrap Value = Rs. 10,000 - Rs. 10,000 = Rs. 0
Conclusion
- The machine will have a scrap value of Rs. 0 at the end of its 10-year useful life.
- This indicates that the machine is expected to have no resale value once it reaches the end of its operational period.
Understanding these concepts is crucial for effective financial planning and asset management.
Depreciation is the reduction in the value of an asset over time, primarily due to wear and tear. In this case, we are dealing with a machine that has a cost of Rs. 10,000 and a useful life of 10 years, with a depreciation rate of 10% per annum.
Calculating Annual Depreciation
- The annual depreciation can be calculated using the formula:
Annual Depreciation = Cost x Rate of Depreciation
- For our machine:
Annual Depreciation = Rs. 10,000 x 10% = Rs. 1,000
Total Depreciation Over Useful Life
- Over the useful life of 10 years, the total depreciation will be:
Total Depreciation = Annual Depreciation x Useful Life
- Thus:
Total Depreciation = Rs. 1,000 x 10 = Rs. 10,000
Calculating Scrap Value
- Scrap value is the estimated residual value of an asset after its useful life.
- To find the scrap value, we use the formula:
Scrap Value = Cost - Total Depreciation
- In this scenario:
Scrap Value = Rs. 10,000 - Rs. 10,000 = Rs. 0
Conclusion
- The machine will have a scrap value of Rs. 0 at the end of its 10-year useful life.
- This indicates that the machine is expected to have no resale value once it reaches the end of its operational period.
Understanding these concepts is crucial for effective financial planning and asset management.
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The useful life of a machine is estimated to be 10 years and cost Rs. 10,000. Rate of depreciation is 10% p.a. The scrap value at the end of its life is?
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The useful life of a machine is estimated to be 10 years and cost Rs. 10,000. Rate of depreciation is 10% p.a. The scrap value at the end of its life is? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about The useful life of a machine is estimated to be 10 years and cost Rs. 10,000. Rate of depreciation is 10% p.a. The scrap value at the end of its life is? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The useful life of a machine is estimated to be 10 years and cost Rs. 10,000. Rate of depreciation is 10% p.a. The scrap value at the end of its life is?.
The useful life of a machine is estimated to be 10 years and cost Rs. 10,000. Rate of depreciation is 10% p.a. The scrap value at the end of its life is? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about The useful life of a machine is estimated to be 10 years and cost Rs. 10,000. Rate of depreciation is 10% p.a. The scrap value at the end of its life is? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The useful life of a machine is estimated to be 10 years and cost Rs. 10,000. Rate of depreciation is 10% p.a. The scrap value at the end of its life is?.
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