Allied & ICAR Exam Bank • ALLIED_2939 NAT • 2 Marks

Section 2: Farm Machinery

Farm Machinery

Subtopic: Cost analysis of implements and tractors

Question Statement:

Using the straight-line depreciation method, a tractor purchased for $P = \text{Rs. }8,00,000$ with estimated salvage value $S = 10\%$ (Rs. $80,000$) over useful life $L = 10\text{ years}$ has annual depreciation in Rs. of:

Answer Key:

72000

Step-by-Step Solution & Explanation

$\text{Depreciation} = \frac{P - S}{L} = \frac{800000 - 80000}{10} = \frac{720000}{10} = 72000\text{ Rs/year}$.
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