A car costing ₹8,50,000 has scrap value of ₹1,25,000. If annual depreciation charge is ₹1,45,000, then useful life of the car is :
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → 5 years
The useful life of the car,
Useful life = $\frac{Cost\,of\,the\,car-Scrap\,value}{Annual\,depreciation}$
$=\frac{8,50,000-1,25,000}{1,45,000}=\frac{7,25,000}{1,45,000}$
$=5\,years$