Factors affecting the calculation of the annual depreciation of an asset are
(A) Body shape of the asset
(B) Original cost of the asset
(C) Scrap value of the asset
(D) Useful life of the asset
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (B), (C) and (D) only
On the straight-line method, the annual depreciation is
\( \displaystyle \text{Annual depreciation}=\frac{\text{Original cost}-\text{Scrap value}}{\text{Useful life (in years)}} \)
So the annual depreciation depends on the original cost, the scrap value and the useful life of the asset, and on nothing else.
Checking the statements
(A) Body shape of the asset — Incorrect. The shape of the asset does not enter the calculation.
(B) Original cost of the asset — Correct. It is the starting value from which depreciation is measured.
(C) Scrap value of the asset — Correct. Only the cost minus the scrap value is spread over the life of the asset.
(D) Useful life of the asset — Correct. It is the number of years over which the depreciation is spread.
CBSE Applied Mathematics (Class XII):
Depreciation
