In 2001, a vehicle was purchased for Rs. 2 Lakh. In 2011, the scrap value of the vehicle became Rs. 50,000. What was the annual depreciation?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Rs.15,000
By the straight line (linear) method, the asset loses the same amount every year. The useful life is 2011 − 2001 = 10 years.
\( \displaystyle \text{Annual depreciation}=\frac{\text{Cost}-\text{Scrap value}}{\text{Useful life}} \)
\( \displaystyle =\frac{2{,}00{,}000-50{,}000}{10} \)
\( \displaystyle =\frac{1{,}50{,}000}{10}=15{,}000 \)
So the annual depreciation is Rs. 15,000.
Why the other options are incorrect
Option (1) Rs.10,000 — Incorrect. Rs. 10,000 per year for 10 years removes only Rs. 1,00,000, leaving Rs. 1,00,000, not Rs. 50,000.
Option (3) Rs.20,000 — Incorrect. Rs. 20,000 is the cost Rs. 2,00,000 divided by 10; the scrap value has not been subtracted.
Option (4) Rs.25,000 — Incorrect. Rs. 25,000 per year for 10 years removes Rs. 2,50,000, more than the cost.
CBSE Applied Mathematics (Class XII):
Depreciation
