Q.Under the Straight Line Method of providing depreciation, the annual depreciation is calculated every year on the:

The Straight Line Method keeps the same base fixed throughout the asset's life, unlike the Written Down Value Method.

Option (c) is correct. The Straight Line Method calculates Annual Depreciation as (Original Cost − Estimated Scrap Value) ÷ Estimated Useful Life, and this same rupee figure is charged every year on the original cost, which is why the total falls in equal, straight-line steps. Option (a) is wrong: market value (what the asset could currently be sold for) plays no role in the SLM formula. Option (b) is wrong: charging depreciation on the written down value (the reducing book value) is exactly what defines the other method — the Written Down Value Method — not SLM. Option (d) is wrong: the scrap value is only deducted from cost before dividing by useful life; it is never itself the base on which depreciation is calculated.

Confusing SLM's fixed base (original cost) with WDV's reducing base (book value) — this exact confusion is what distinguishes the two methods and is the most common exam error.