A machine costing Rs. 36000 has an effective life of 5 years with scrap value of Rs. 5000 following a linear method of depreciation. Which of the following statements are correct?
(A) The value of the machine after 1 year is Rs. 31000
(B) The value of the machine after 2 years is Rs. 23600
(C) The value of the machine after 3 years is Rs. 18400
(D) The value of the machine after 4 years is Rs. 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
Under the linear (straight line) method, the same amount is written off every year, so that the cost comes down to the scrap value at the end of the life:
\( \displaystyle \text{Annual depreciation} = \frac{36000 - 5000}{5} \)
\( \displaystyle = \frac{31000}{5} = 6200 \)
The value after n years is
\(V_n = 36000 - 6200n\)
So the values after 1, 2, 3 and 4 years are Rs. 29800, Rs. 23600, Rs. 17400 and Rs. 11200.
Checking the statements
(A) The value of the machine after 1 year is Rs. 31000 — Incorrect. \(36000 - 6200 = 29800\).
(B) The value of the machine after 2 years is Rs. 23600 — Correct. \(36000 - 2 \times 6200 = 23600\).
(C) The value of the machine after 3 years is Rs. 18400 — Incorrect. \(36000 - 3 \times 6200 = 17400\).
(D) The value of the machine after 4 years is Rs. 11200 — Correct. \(36000 - 4 \times 6200 = 11200\).
CBSE Applied Mathematics (Class XII):
Depreciation
