A mobile phone costing ₹50000 has a useful life of 5 years. If the annual depreciation is ₹5000, then by using a linear method, its scrap value is
A mobile phone costing ₹50000 has a useful life of 5 years. If the annual depreciation is ₹5000, then by using a linear method, its scrap value is
Solution
✅ Correct Option: 1
Given Information:
- Original Cost = ₹50,000
- Useful Life = 5 years
- Annual Depreciation = ₹5,000
- Method = Linear (same amount lost each year)
Total depreciation over 5 years:
Total Depreciation = Annual Depreciation × Number of Years
Total Depreciation = ₹5,000 × 5
Total Depreciation = ₹25,000
Scrap Value = Original Cost − Total Depreciation
Scrap Value = ₹50,000 − ₹25,000
Scrap Value = ₹25,000
Therefore, the scrap value of the mobile phone is ₹25,000.
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