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:
In the straight-line method, annual depreciation is calculated as \( \frac{Cost - Scrap Value}{Useful Life} \).

Step 2: Key Formula or Approach:
Let \( C = 55,000 \), \( n = 8 \), \( D = 5,000 \). Let \( S \) be the scrap value.
\[ D = \frac{C - S}{n} \]

Step 3: Detailed Explanation:
\[ 5,000 = \frac{55,000 - S}{8} \]
\[ 5,000 \times 8 = 55,000 - S \]
\[ 40,000 = 55,000 - S \]
\[ S = 55,000 - 40,000 = 15,000 \]

Step 4: Final Answer:
The scrap value is Rs.15,000.