Topic: Industrial Engineering
A machine is purchased at a cost of Rs. 11,000. The assumed useful life is 9 years and the salvage value is Rs. 2,000. Based on sum of year digits method the depreciation for the fifth year would be Rs.
- A. 1,500
- B. 1,200
- C. 1,000
- D. 800
Answer: C. 1,000
Explanation: Sum of Year Digits (SYD) = $\frac{n(n+1)}{2} = \frac{9(10)}{2} = 45$.
Depreciable Base = Cost - Salvage Value = $11000 - 2000 = 9000$.
For the 5th year, the remaining life at the start of the year is $(9 - 5 + 1) = 5$ years.
Depreciation for year 5 = Depreciable Base $\times \frac{\text{Remaining Life}}{\text{SYD}} = 9000 \times \frac{5}{45} = 9000 \times \frac{1}{9} = 1000$.