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:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Rs. 5000
By the linear (straight-line) method, the loss in value, cost minus scrap value, is spread equally over the useful life:
\( \displaystyle \text{Annual depreciation} = \frac{\text{Cost} - \text{Scrap value}}{\text{Useful life}} \)
\( \displaystyle = \frac{25000 - 5000}{4} = \frac{20000}{4} = 5000 \)
CBSE Applied Mathematics (Class XII):
Linear or Straight Line Method
