An electric scooter costs Rs. 36,000 and has a useful life of 15 years. If annual depreciation is Rs. 2,000, Its scrap value by using linear method of depreciation is:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Rs. 6,000
In the linear method, the same amount is written off every year, so over the whole life the cost falls by life × annual depreciation:
\( \text{Scrap value}=\text{Cost}-\text{Life}\times\text{Annual depreciation} \)
\( =36000-15\times 2000 \)
\( =6000 \)
So the scrap value is Rs. 6,000.