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
Answer & explanation
Correct answer: option 2
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