CBSE · Class 11 · Accountancy · Depreciation, Provisions and ReservesWhat is the formula to calculate annual depreciation under the Straight Line Method?
Step-by-Step Solution
Annual Depreciation = (Original Cost of Asset - Estimated Scrap Value) / Estimated Useful Life of Asset.
Detailed Options Breakdown
Option : (Original Cost + Scrap Value) / Useful Life
Incorrect choice. This distractor represents a common misunderstanding of the core principles of Depreciation, Provisions and Reserves.
Option 1: (Original Cost - Scrap Value) / Useful Life (Correct Answer)
Correct choice. Refer to the step-by-step verified solution guidelines above for details.
Option 2: Scrap Value / Original Cost
Incorrect choice. This distractor represents a common misunderstanding of the core principles of Depreciation, Provisions and Reserves.
Option 3: Original Cost * Useful Life
Incorrect choice. This distractor represents a common misunderstanding of the core principles of Depreciation, Provisions and Reserves.
💡 Study Guide: This question tests core syllabus concepts from Depreciation, Provisions and Reserves. For formulas, key summaries, and mock exam reference guides, read the full Depreciation, Provisions and Reserves Revision Notes.