An office buys a laptop for Rs. 84,000. Its useful life is 6 years, after which its scrap value will be Rs. 12,000. The annual depreciation by the straight line method is
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Rs. 12,000
In the straight line (linear) method, the same amount is written off every year:
\( \displaystyle D = \frac{C - S}{n} \)
where C is the cost, S the scrap value and n the useful life in years. With C = 84000, S = 12000 and n = 6:
\( \displaystyle D = \frac{84000 - 12000}{6} = \frac{72000}{6} = 12000 \)
Why the other options are incorrect
Option (1) Rs. 14,000 — Incorrect. This is 84000 ÷ 6, which forgets to take away the scrap value.
Option (3) Rs. 2,000 — Incorrect. This is 12000 ÷ 6, the scrap value spread over the life; the scrap value is the part that is not depreciated.
Option (4) Rs. 72,000 — Incorrect. This is the total depreciation over all 6 years, not the depreciation for one year.