A machine costing Rs. 1,00,000 has a useful life of 5 years. The estimated scrap value is Rs. 20,000. Using linear method, the annual depreciation is
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Rs. 16,000
By the linear (straight line) method, the cost less the scrap value is spread equally over the useful life:
\( \displaystyle \text{Annual depreciation}=\frac{\text{Cost}-\text{Scrap value}}{\text{Useful life}} \)
\( \displaystyle =\frac{100000-20000}{5} \)
\( =16000 \)
So the annual depreciation is Rs. 16,000.
Why the other options are incorrect
Option (2) Rs. 20,000 — Incorrect. This ignores the scrap value and divides the full cost, Rs. 1,00,000, by 5.
Option (3) Rs. 25,000 — Incorrect. The annual depreciation is Rs. 16,000, not Rs. 25,000.
Option (4) Rs. 15,000 — Incorrect. The annual depreciation is Rs. 16,000, not Rs. 15,000.
CBSE Applied Mathematics (Class XII):
Depreciation
