A computer costing ₹5,00,000 will depreciate to a scrap value of ₹50,000 in 5 years. Using linear method of depreciation find the value of computer at the end of third year
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → ₹2,30,000
Annual depreciation = $\frac{Cost\,Price-Scrap\,Value}{Useful\,Life(in\,years)}$
$=\frac{5,00,000-50,000}{5}$
$=\frac{4,50,000}{5}=90,000$ per year
Depreciation of 3 years = $90,000×3$
$=2,70,000$
Value at the end of 3 years = Cost Price - Depreciation
$=5,00,000-2,70,000$
$=2,30,000$