The cost of a machine is Rs 20,000 and its estimated useful life is 10 years. The scrap value of the machine, when its value depreciates at 10% p.a., is :
use \((0.9)^{10} = 0.35\)
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Rs. 7000
Depreciation at 10% p.a. is charged on the value at the start of each year (reducing balance), so the value is multiplied by 0.9 every year. The scrap value is the value at the end of the useful life:
\( \displaystyle S = C\left(1 - \frac{r}{100}\right)^n \)
\( = 20000 \times (0.9)^{10} \)
\( = 20000 \times 0.35 = 7000 \)
Note: This topic was not in the CUET 2026 syllabus.