A manufacturer buys a machine for $20,000. Its estimated life is five years with a scrap value of $10,000. Depreciation is charged on the straight-line method. What is the percentage rate of depreciation on an annual basis?

20%

50%

10%

To calculate the annual depreciation rate, you can use the following formula:

Annual Depreciation = (Cost - Scrap Value) / Estimated Life

= ($20,000 - $10,000) / 5

= $10,000 / 5

= $2,000 per year

To find the percentage rate of depreciation, divide the annual depreciation by the cost and multiply by 100:

Percentage Rate = (Annual Depreciation / Cost) x 100

= ($2,000 / $20,000) x 100

= 10%

So, the percentage rate of depreciation on an annual basis is 10%.