A machine costing Rs. 55,000 is expected to have a useful life of 10 years and a final scrap value of Rs. 5,000. The annual depreciation charge using the straight line method is :
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Rs. 5,000
Under the straight line method, the fall in value (cost minus scrap value) is spread equally over the useful life:
\( \displaystyle \text{Annual depreciation}=\frac{\text{Cost}-\text{Scrap value}}{\text{Useful life}} \)
\( \displaystyle =\frac{55000-5000}{10} \)
\( \displaystyle =\frac{50000}{10}=5000 \)
The annual depreciation charge is Rs. 5,000.
CBSE Applied Mathematics (Class XII):
Depreciation
