If an asset costs Rs. 50,000 with an estimated useful life of 6 years and a scrap value of Rs. 5000. Then by using a linear depreciation method, the annual depreciation of the asset will be:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Rs. 7,500
In the linear (straight line) method, the cost less the scrap value is written off in equal yearly amounts:
\( \displaystyle \text{Annual depreciation} = \frac{\text{Cost} - \text{Scrap value}}{\text{Useful life}} \)
\( \displaystyle = \frac{50000 - 5000}{6} = \frac{45000}{6} = 7500 \)
So the annual depreciation is Rs. 7,500.
CBSE Applied Mathematics (Class XII):
Linear or Straight Line Method
