Original cost of an asset is Rs. 57,000, scrap value Rs.2,000 and estimated life 10 years. What will be the amount of depreciation in the first year according to the sum of the year’s digits methods:

The correct answer is B. Rs. 5,900.

The sum of the year’s digits method is a depreciation method that allocates a greater portion of the depreciation expense to the early years of an asset’s life. The formula for calculating depreciation using the sum of the year’s digits method is:

Depreciation expense = (Cost – Salvage value) * (N / (N + 1))

where:

• N = Number of years in the asset’s estimated life

In this case, the cost of the asset is Rs. 57,000, the salvage value is Rs. 2,000, and the estimated life is 10 years. Therefore, the depreciation expense for the first year is:

Depreciation expense = (57,000 – 2,000) * (1 / (1 + 2 + … + 10)) = 57,000 * (1 / 55) = Rs. 5,900.

The other options are incorrect because they do not take into account the sum of the year’s digits.