If an asset costs Rs. 50,000 with an estimated useful life of 6 years and a scrap value of Rs. 5000. Then by using a linear depreciation method, the annual depreciation of the asset will be:
If an asset costs Rs. 50,000 with an estimated useful life of 6 years and a scrap value of Rs. 5000. Then by using a linear depreciation method, the annual depreciation of the asset will be:
Solution
✅ Correct Option: 2
Given:
Original Cost = Rs. 50,000
Useful Life = 6 years
Scrap Value = Rs. 5,000
Using the linear (straight-line) depreciation method, the annual depreciation is calculated by dividing the total depreciable amount by the useful life.
Annual Depreciation
Total depreciable amount:
Total Depreciation
Total Depreciation
Annual depreciation:
Annual Depreciation
Annual Depreciation
Therefore, the annual depreciation of the asset is Rs. 7,500.
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