An average useful life of a truck is 10 years, with final scrap value of Rs. 50,000. If the annual depreciation of the truck is Rs. 1,25,000, then the original cost of the truck is:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Rs. 13,00,000
$\text{Annual depreciation} = \frac{\text{Cost} - \text{Scrap}}{\text{Life}}$
$125000 = \frac{C - 50000}{10}$
$C - 50000 = 125000 \times 10 = 1250000$
$C = 1250000 + 50000 = 1300000$
The original cost of the truck is ₹13,00,000.