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A firm purchased a plant for Rs. 40,000. Erection charges amounted to Rs. 2,000. Effective life of the plant is 5 years. Calculate the amount of depreciation per year under straight line method? |
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Answer» Amount of depreciation = (Total Cost - Scrap Value) / (Estimated life) = Cost of plant + erection charge = Rs. 40,000 + 2,000 = Rs. 42,000 = \(\frac{42,000-0}{5\,years}\) = Rs. 8,400 |
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