Question

A mobile phone costs ₹ 12,000 and its scrap value after a useful life of 3 years is ₹ 3,000. Then, the book value of the mobile phone at the end of 2 years is:

• A. ₹ 3,000
• B. ₹ 6,000
• C. ₹ 5,000
• D. ₹ 7,000

Hint:

Depreciation per year for the straight-line method is calculated as \( \frac{{Cost} - {Scrap Value}}{{Useful Life}} \). The book value is found by subtracting accumulated depreciation from the original cost.

Answer 1

The Correct Option is B

Step 1: Annual Depreciation: \[ {Depreciation} = \frac{{Cost} - {Scrap Value}}{{Useful Life}} = \frac{12000 - 3000}{3} = 3000 \, {per year}. \] Step 2: Book Value Post 2 Years: \[ {Book Value} = {Cost} - (2 \cdot {Depreciation}) = 12000 - 2 \times 3000 = 6000. \]