What is the correct formula for calculating total depreciation on an asset?

Total depreciation represents the total decrease in the value of an asset from the time of acquisition until the end of its useful life.

The formula is:

Total Depreciation = Acquisition Cost – Salvage Value

When an asset is purchased at its acquisition cost and used over its life, it eventually reaches the end of its useful life where it has only salvage value (also called scrap value or residual value) remaining. The difference between these two amounts is the total depreciation that will be charged over the asset's entire useful life.

For example, if a machine costs ₹1,00,000 and its salvage value at the end is ₹10,000, then:

Total Depreciation = ₹1,00,000 – ₹10,000 = ₹90,000

This ₹90,000 is the depreciable amount that will be allocated as depreciation expense over the asset's useful life using any depreciation method (Straight Line, Written Down Value, etc.).

Option 1 (multiplying the values) has no logical basis. Option 3 incorrectly uses salvage value instead of depreciable amount. Option 4 gives annual depreciation under the straight-line method when salvage value is ignored, not total depreciation.