Cost, salvage and useful life of an asset are Rs. 10,000, Rs. 1,000 and 3 years respectively. The amount of depreciation as per sum of the years digit method for the first year will be

The correct answer is C. Rs. 3,333.

The sum of the years digit method is a depreciation method that allocates a higher depreciation expense in the early years of an asset’s life and a lower depreciation expense in the later years. The formula for calculating depreciation expense using the sum of the years digit method is:

Depreciation expense = (Cost – Salvage value) / (Sum of the years of the asset’s life)

In this case, the cost of the asset is Rs. 10,000, the salvage value is Rs. 1,000, and the useful life is 3 years. The sum of the years of the asset’s life is 1 + 2 + 3 = 6. Therefore, the depreciation expense for the first year is:

Depreciation expense = (10,000 – 1,000) / 6 = 3,333

The other options are incorrect because they do not represent the correct amount of depreciation expense for the first year.