A machine costs ₹50,000 and has a useful of 4 years. The estimated scrap value of ₹10,000. The book value (in ₹) of this machine after 2 years is :
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → 30,000
Using Straight-line Depreciation method,
$\text{Annual Depreciation}=\frac{\text{Cost of Machine-Scrap Value}}{\text{Useful life}}$
$=\frac{50,000-10,000}{4}=10,000$
Book value = Cost of Machine - (Annual Depreciation × Years)
$= 50,000-(10,000×2)$
$=30,000$