The scrap value of a machine costing Rs. 75,000 after 4 years of use is Rs. 25000. Using straight line method the annual depreciation of the machine is:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Rs. 12,500
In the straight line method, the machine loses the same amount every year:
\( \displaystyle \text{Annual depreciation} = \frac{\text{Cost} - \text{Scrap value}}{\text{Useful life}} \)
\( \displaystyle = \frac{75000 - 25000}{4} = \frac{50000}{4} = 12500 \)
So the annual depreciation is Rs. 12,500.
Why the other options are incorrect
Option (1) Rs. 50,000 — Incorrect. This is the total depreciation over all 4 years, not the depreciation per year.
Option (2) Rs. 25,000 — Incorrect. This is the scrap value.
Option (4) Rs. 6,250 — Incorrect. This is the scrap value divided by 4; the scrap value must be subtracted from the cost, not divided.
CBSE Applied Mathematics (Class XII):
Depreciation
