The annual depreciation of a car is ₹40,000. If the scrap value of the car after 15 years is ₹50,000, then the original cost of the car using linear method is
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → ₹6,50,000
Given:
Annual depreciation: ₹40,000
Scrap value after 15 years: ₹50,000
Let original cost = $C$
Linear depreciation formula: $C - (\text{Depreciation} \times \text{years}) = \text{Scrap value}$
Substitute values: $C - (40,000 \times 15) = 50,000$
$C - 600,000 = 50,000 \Rightarrow C = 650,000$