The cost of a machinery is ₹8,00,000. Its scrap value will be one tenth of its original cost in 15 years. Using linear method of depreciation, the book value of the machine at the end of 10th year will be:

₹3,20,000

The correct answer is Option (2) → ₹3,20,000

Initial Cost of Machinery (P) = 8,00,000

Scrap Value (S) = $\frac{1}{10}$ of 8,00,000 = 80,000

Useful life (n): 15 years

Depreciation, $D=\frac{P-S}{n}$

$=\frac{8,00,000-80,000}{15}=\frac{7,20,000}{15}$

$=48,000$

∴ Book value after 10 years

$=P-(D×Years)$

$=8,00,000-(48,000×10)$

$=3,20,000$