For using the equal installment method for depreciation the relevant formula is:

Annual charge against profit

= \frac{O r i g i n a l c o s t - R e s i d u a l v a l u e}{N u m b e r o f y e a r s o f a c t i v e l i f e}

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Annual charge against profit

= \frac{N u m b e r o f y e a r s o f a c t i v e l i f e}{O r i g i n a l c o s t - R e s i d u a l v a l u e}

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Annual charge against profit

= \frac{O r i g i n a l c o s t - R e s i d u a l v a l u e}{E s t i m a t e d n u m b e r o f y e a r s r e m a i n i n g}

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Annual charge against profit

= \frac{E s t i m a t e d n u m b e r o f y e a r s r e m a i n i n g}{O r i g i n a l c o s t - R e s i d u a l v a l u e}

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Solution

The correct option is A Annual charge against profit $= \frac{O r i g i n a l c o s t - R e s i d u a l v a l u e}{N u m b e r o f y e a r s o f a c t i v e l i f e}$
Equal installment Method:
In this method a fixed or equal amount of depreciation written off as depreciation at the end of each year, during the life time of the asset. Thus the book value of the asset will become zero or its residual value. This method is suitable for patent, furniture, short-lease etc.
The amount of depreciation may be calculated as :
Amount Charge against profit = (original cost – Residual value)/Number of years of active life

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