SSC JE Civil Engineering 30-Oct-2020 Shift 1 Paper

Question : 148 of 200

Marks: +1, -0

Determine the present value of a building that was constructed 30 years ago at Rs. 50,000. The estimated life of the building is 50 years, at the end of which it will have 10% scrap value of its cost of construction. Depreciation is to be calculated by straight line method.

Rs. 24,000
Rs. 25,000
Rs. 23,000
Rs. 15,000

Validate

Solution:

Cost of Construction of building i.e. Purchase Value = Rs. 50, 000/-
Salvage Value = 10 % of Purchase Value = Rs. 5,000/-
Design life of building = 50 Years
Annual Depreciation

= (50,000-5,000)/50

⇒ Annual Depreciation = Rs. 900 /year
According to straight-line depreciation method, the building will depreciate Rs. 900 every year.
Total Depreciation at the end of 30 years = Rs. 900 × 30 = Rs. 27,000/-
Present Value at the end of 30 years = {Purchase Value} – {Total Depreciation at the end of 30 years}
= Rs. 50,000 – Rs. 27000
= Rs. 23,000/- Ans.

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