A machine costing Rs. 50,000 has a useful life of 4 years. The estimated scrap value is Rs. 10,000. The rate of depreciation per annum is:

20%

The correct answer is Option (1) → 20% **

Cost price = 50,000

Scrap value = 10,000

Life = 4 years

Using straight-line depreciation:

Annual depreciation = $\displaystyle \frac{50000 - 10000}{4}$

= $\displaystyle \frac{40000}{4} = 10000$

Rate of depreciation per annum:

$\displaystyle \frac{10000}{50000}\times 100 = 20\%$

Rate of depreciation = 20% per annum