What is the correct formula for calculating total depreciation on an asset?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Acquisition Cost - Salvage Value
Over its whole life an asset loses its cost down to the amount it can still fetch at the end, its salvage value. So the total depreciation over the life of the asset is the acquisition cost less the salvage value; this amount is then spread over the years of use.
NCERT (2026-27 edition):
NCERT (2026-27 edition): |
