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A vehicle costing Rs. 10,50,000 has a final scrap value of Rs. 5,25,000. If annual depreciation charge is Rs. 75,000, then useful life of the vehicle is :

Solution

✅ Correct Option: 3

Useful life =Cost−ScrapAnnual depreciation=1050000−52500075000=52500075000=7=\frac{\text{Cost}-\text{Scrap}}{\text{Annual depreciation}}=\frac{1050000-525000}{75000}=\frac{525000}{75000}=7 years.

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