[amp_mcq option1=”Rs. 1000″ option2=”Rs. 2000″ option3=”Rs. 3000″ option4=”Rs. 5000″ correct=”option2″]
The correct answer is B. Rs. 2000.
The straight-line method of depreciation is a method of calculating depreciation that allocates an equal amount of the cost of an asset to each accounting period over its estimated useful life. The annual depreciation expense is calculated by dividing the cost of the asset by its estimated useful life.
In this case, the cost of the asset is Rs. 6000, its estimated useful life is 5 years, and its residual value is Rs. 1000. The annual depreciation expense is therefore:
Depreciation expense = (Cost of asset – Residual value) / Estimated useful life
= (6000 – 1000) / 5
= 2000
Therefore, the annual amount of depreciation using straight line method of depreciation is Rs. 2000.
Option A is incorrect because it is the residual value of the asset.
Option C is incorrect because it is the total depreciation expense over the estimated useful life of the asset.
Option D is incorrect because it is the cost of the asset.