The cost of a machine is Rs. 70,000. Its life span is 10 years, after which its expected residual price will be Rs. 5,000. Based on straight line method, the depreciation for first four year will be

Solution (By Examveda Team)

Understanding Depreciation:
Depreciation is the decrease in the value of an asset over time due to wear and tear, obsolescence, or other factors.

Straight-Line Method:
This is a simple way to calculate depreciation. It assumes the asset loses value evenly over its useful life.

Calculating Depreciation:
First, find the total depreciation amount: Cost of the machine - Residual value
In this case, that's Rs. 70,000 - Rs. 5,000 = Rs. 65,000

Next, divide the total depreciation by the asset's lifespan (in years): Total Depreciation / Useful Life
So, Rs. 65,000 / 10 years = Rs. 6,500 per year

Depreciation for Four Years:
Finally, to find the depreciation for the first four years, multiply the annual depreciation by four:
Rs. 6,500/year * 4 years = Rs. 26,000

Therefore, the correct answer is Option B: Rs. 26,000