As asset costing ₹2,00,000 is expected to have a useful life of 10 years and a final scrap value of ₹40,000. The book value of the machine at the end of sixth year is :
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → ₹1,04,000
Annual Depreciation = $\frac{Cost\,of\,Asset-Scrap\,value}{Useful\,life}$
$=\frac{200000-40000}{10}=16000$
∴ Total depreciation = $(16000 × 6) = 96,000$
Hence, Book value = Cost of Asset - Depreciation
= Rs 1,04,000