A main frame computer whose cost is ₹5,00,000 will depreciate to a scrap value of ₹50,000 in 5 years. Using the linear depreciation, the book value of the computer at the end of 3 years will be :
Answer & explanation
Correct answer: option 4
$\text{Original cost}=500000.$
$\text{Scrap value}=50000.$
$\text{Life}=5\text{ years}.$
$\text{Total depreciation}=500000-50000=450000.$
$\text{Annual depreciation}=\frac{450000}{5}=90000.$
$\text{Depreciation in 3 years}=3\times90000=270000.$
$\text{Book value after 3 years}=500000-270000=230000.$
$\text{Book value}=₹2,30,000.$