The original cost of an asset is Rs.1,00,000 with an estimated scrap value of Rs.16,000 at the end of its useful life of 5 years. The depreciation on the asset for its whole life is Rs.84,000, what will be the amount to be charged to the Profit & Loss A/c, if the Sinking Fund table shows that Re.0.180975 if invested yearly @5% p.a. produces Re.1 at the end of 5 years?
Rs.15,202
The correct answer is option 2. The total depreciation of Rs.84,000 divided over 5 years results in an amount of Rs.15,202 to be charged to the Profit & Loss A/c annually, considering the value provided by the Sinking Fund table.
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