The scrap value of a machine costing ₹ 75,000 after 4 years of use is ₹ 25000. Using straight line method the annual depreciation of the machine is:
The scrap value of a machine costing ₹ 75,000 after 4 years of use is ₹ 25000. Using straight line method the annual depreciation of the machine is:
Solution
✅ Correct Option: 3
The machine's original cost is ₹75,000 and its scrap value after 4 years is ₹25,000.
Total Depreciation = Original Cost - Scrap Value
Total Depreciation = ₹75,000 - ₹25,000
Total Depreciation = ₹50,000
In the straight line method, depreciation is equal every year.
Annual Depreciation = Total Depreciation ÷ Number of Years
Annual Depreciation = ₹50,000 ÷ 4
Annual Depreciation = ₹12,500
Therefore, the annual depreciation of the machine is ₹12,500.
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