A machine costing ₹1,00,000 has a useful life of 5 years. The estimated scrap value is ₹20,000. Using straight line method, the annual depreciation is

₹16,000

The correct answer is Option (2) → ₹16,000 **

Cost of machine = ₹1,00,000

Scrap value = ₹20,000

Useful life = 5 years

Annual depreciation (straight-line method):

= (Cost − Scrap value) / Life

= (100000 − 20000) / 5

= 80000 / 5

= ₹16,000 per year