A machine costing ₹36000 has an effective life of 5 years with scrap value of ₹5000 following a linear method of depreciation. Which of the following statements are correct?
(A) The value of the machine after 1 year is ₹31000
(B) The value of the machine after 2 years is ₹23600
(C) The value of the machine after 3 years is ₹18400
(D) The value of the machine after 4 years is ₹11200
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (B) and (D) only
Cost = ₹36000
Scrap value = ₹5000
Life = 5 years
Annual depreciation = $\frac{36000 - 5000}{5} = \frac{31000}{5} = 6200$
Value after 1 year = $36000 - 6200 = 29800$
Value after 2 years = $36000 - 2(6200) = 23600$
Value after 3 years = $36000 - 3(6200) = 17400$
Value after 4 years = $36000 - 4(6200) = 11200$
The correct statements are (B) and (D).