Question

A sofa set costing Rupees 36000 has a useful life of 10 years. If the annual depreciation is Rupees 3000, then the scrap value by linear method is:

• A. Rupees 4000
• B. Rupees 6000
• C. Rupees 4200
• D. Rupees 5400

Hint:

The formula for annual depreciation in the straight-line method is: (Cost - Scrap Value) / Useful Life. You can rearrange this formula to find any of the components if the others are known, as was required in this problem.

Answer 1

The Correct Option is B

Step 1: Understanding the Concept:
This problem involves the straight-line (linear) method of depreciation. This method assumes that an asset loses an equal amount of value each year over its useful life. The scrap value is the remaining value after all depreciation has been accounted for.
Step 2: Key Formula or Approach:
The relationships under the linear method are: 1. Total Depreciation = Annual Depreciation \(\times\) Useful Life 2. Scrap Value = Original Cost - Total Depreciation
Step 3: Detailed Explanation:
Given values are: - Original Cost = Rupees 36,000 - Useful Life = 10 years - Annual Depreciation = Rupees 3,000
First, calculate the total depreciation over the asset's useful life: \[ \text{Total Depreciation} = 3,000 \text{ per year} \times 10 \text{ years} = 30,000 \] Next, calculate the scrap value by subtracting the total depreciation from the original cost: \[ \text{Scrap Value} = 36,000 - 30,000 = 6,000 \] Step 4: Final Answer:
The scrap value of the sofa set is Rupees 6,000.