Question

The cost of new machine will be $100000 after 12 years. In that time the old machine can be sold for $5000 as salvage value. What amount should be retained out of profits at the end of each year accumulate at C.I & P.A?

Answer 1

To get the amount to be retained out of profits per year ;

=$\frac{Cost of Asset - Salvage Value} {Useful Life of Asset}$

=$(\frac{100,000-5,000}{12})$

=$\frac{95,000}{12}$

=$ 7,916.67