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An asset costing Rs. 1,50,000 has a final scrap value of Rs. 25,000. If annual depreciation charge is Rs. 25,000, then useful life of the asset is :

Solution

✅ Correct Option: 3

Annual depreciation =Cost−ScrapLife⇒Life=1,50,000−25,00025,000=1,25,00025,000=5= \frac{\text{Cost} - \text{Scrap}}{\text{Life}} \Rightarrow \text{Life} = \frac{1{,}50{,}000 - 25{,}000}{25{,}000} = \frac{1{,}25{,}000}{25{,}000} = 5 years.

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