The scrap value of a machine costing ₹75,000 after 4 years of use is ₹25000. Using straight line method the annual depriciation of the machine is:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → ₹12,500
Given:
Cost of machine = ₹75,000
Scrap value = ₹25,000
Life = 4 years
Straight line depreciation (SLM) formula:
Annual Depreciation = $\frac{\text{Cost} - \text{Scrap Value}}{\text{Life}}$
Substitute values:
Annual Depreciation = $\frac{75,000 - 25,000}{4} = \frac{50,000}{4} = 12,500$