Straight-line depreciation calculation — quick check A machine costs ₹5,000, has a service life of 5 years, and a salvage value of ₹1,000. What is the annual depreciation by the straight-line method?

Introduction / Context:Straight-line (SL) depreciation allocates an equal share of the depreciable base to each year of service, making it the simplest accounting method for capital cost allocation.

Given Data / Assumptions:

• Purchase cost P = ₹5,000.
• Salvage value S = ₹1,000.
• Life n = 5 years.

Concept / Approach:The straight-line formula is Dep(year) = (P − S)/n. The depreciable base is the portion of cost that will be written off over the life, excluding salvage.

Step-by-Step Solution:Compute depreciable base: P − S = 5,000 − 1,000 = 4,000.Divide by life n: 4,000 / 5 = 800.Annual SL depreciation = ₹800 per year.

Verification / Alternative check:Summing ₹800 for 5 years gives ₹4,000, which equals the depreciable base, confirming the calculation.

Why Other Options Are Wrong:

• ₹300/₹600: understate the depreciable charge; total would not reach ₹4,000.
• ₹1,000: would overstate annual charge; total would exceed depreciable base.

Common Pitfalls:

• Forgetting to subtract salvage value from purchase cost.
• Confusing SL with accelerated methods like SYD or declining-balance.

Final Answer:₹800 per year