The cost of a machine in Rs 20,000 and its estimated useful life is 10 years. The scrap value of the machine, when its value depriciates at 10% p.a, is :
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Rs. 6974
To calculate the scrap value of the machine in 10 years, using annual depreciation of 10%
Scrap value = Cost Price × (1 - Rate of Depreciation)${^{years}}$
$=20000×(0.90)^{10}$
$=20000×0.3487$
$≃₹6974$