A machine costing Rs. 25000 has a useful life of 4 years. The estimated scrap value is Rs. 5000. The annual depreciation by linear method is:

Rs. 5000

The correct answer is Option (2) → Rs. 5000

Cost of machine = 25000

Scrap value = 5000

Life = 4 years

Annual depreciation (straight-line method):

$\frac{\text{Cost} - \text{Scrap}}{\text{Life}} = \frac{25000 - 5000}{4}$

$= \frac{20000}{4}$

$= 5000$

Annual depreciation = ₹5000