Question

A TV set costing Rs.55,000 has a useful life of 8 years. If annual depreciation is Rs.5,000, then the scrap value by straight line method is:

• A. Rs.5,000
• B. Rs.20,000
• C. Rs.10,000
• D. Rs.15,000

Hint:

Straight-line depreciation results in a constant expense over the useful life of an asset.

Answer 1

The Correct Option is D

Step 1: Understanding the Concept:
The straight-line depreciation formula is: \( \text{Annual Depreciation} = \frac{\text{Cost} - \text{Scrap Value}}{\text{Useful Life}} \).

Step 2: Detailed Explanation:
Given: Cost = 55,000; Life = 8; Depreciation = 5,000.
\( 5,000 = \frac{55,000 - \text{Scrap Value}}{8} \).
\( 5,000 \times 8 = 55,000 - \text{Scrap Value} \).
\( 40,000 = 55,000 - \text{Scrap Value} \).
\( \text{Scrap Value} = 55,000 - 40,000 = 15,000 \).

Step 3: Final Answer:
The scrap value is ₹15,000.