A vehicle costing ₹1,25,000 has scrap value of ₹25,000. If annual depreciation is ₹12,500, then useful life of vehicle is :
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → 8 years
The straight line depreciation is,
$\text{Annual Depreciation} = \frac{\text{Cost of Vehicle-Scrap value}}{\text{Useful life}}$
$⇒12,500=\frac{1,25,000-25,000}{n}$
$⇒n=\frac{1,00,000}{12,500}=8$ years