Subtopic: Rasp bar, spike tooth and axial flow cylinders
Question Statement:
A tractor is purchased for $\text{Rs. }800000$. Its expected useful life is $10\text{ years}$, after which its salvage value is estimated to be $10\%$ of the initial purchase price. Using the straight-line method, the annual depreciation is $\text{Rs. }$ ________ (answer in integer).
Answer Key:
72000
Step-by-Step Solution & Explanation
Using the straight-line depreciation formula:
$\text{Annual Depreciation } D = \frac{P - S}{L}$
Where:
- Initial price $P = \text{Rs. }800000$
- Salvage value $S = 0.10 \times 800000 = \text{Rs. }80000$
- Useful life $L = 10\text{ years}$
$D = \frac{800000 - 80000}{10} = \frac{720000}{10} = \text{Rs. }72000$