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The original cost of a property is Rs.24000. Its scrap value at the end of its total useful life of 5 year is Rs.2400. What will be the book value at the end of three years? (Adopt straight line method for depreciation)
  • a)
    Rs 9000
  • b)
    Rs 10500
  • c)
    Rs 11040
  • d)
    Rs 13800
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
The original cost of a property is Rs.24000. Its scrap value at the en...
Given:
Original cost of the property = Rs. 24000
Scrap value at the end of total useful life = Rs. 2400
Total useful life = 5 years

To find:
Book value at the end of three years

Solution:
Depreciation is the decrease in the value of an asset over time. In straight line method, depreciation is calculated by dividing the difference between the original cost and the scrap value by the useful life of the asset.

Depreciation per year = (Original cost - Scrap value) / Total useful life
Depreciation per year = (24000 - 2400) / 5
Depreciation per year = Rs. 4320

Calculation:
Depreciation for three years = Depreciation per year * Number of years
Depreciation for three years = 4320 * 3
Depreciation for three years = Rs. 12960

Book value at the end of three years = Original cost - Depreciation for three years
Book value at the end of three years = 24000 - 12960
Book value at the end of three years = Rs. 11040

Therefore, the correct answer is option 'c' Rs. 11040.
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Community Answer
The original cost of a property is Rs.24000. Its scrap value at the en...
Annual depreciation = 

Book value at a particular year = original cost- amount of depreciation upto previous year
Amount of depreciation in three years = 3 x 4320 = 12960
Book value at the end of three years = 24000-12960 = Rs. 11040
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The original cost of a property is Rs.24000. Its scrap value at the end of its total useful life of 5 year is Rs.2400. What will be the book value at the end of three years? (Adopt straight line method for depreciation)a)Rs 9000b)Rs 10500c)Rs 11040d)Rs 13800Correct answer is option 'C'. Can you explain this answer?
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