An asset costing ₹50,000 has useful life of 4 years. The estimated scrap value is ₹10,000. By using linear depreciation method, the book value at the end of the second year is :
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → ₹30,000
For annual depreciation:
Annual depreciation = $\frac{Cost\,of\,the\,sheet-Scrap\,value}{Useful\,life}$
$=\frac{50,000-10,000}{4}=10,000$
Book value = Cost of the asset - (Annual depreciation × No. of years)
$=50,000-(10,000×2)$
$=30,000$