A machine is purchased for ₹7,00,000. Expenses incurred on its cartage and installation ₹3,00,000. Depreciation is charged @ 20% p.a. according to the Straight Line Method for the first year ending on 31 March 2022. Calculate the difference in the amount of depreciation for the 1st year, if this machine was purchased on 1 April 2021 and if the machine was purchased on 1 July 2021.
₹50,000
The correct answer is option 1. If the machine was purchased on 1 April 2021, the depreciation for the first year would be ₹20% of ₹10,00,000 (₹7,00,000 + ₹3,00,000) = ₹2,00,000. For purchase on 1 July 2021, depreciation would be for 9 months, i.e., ₹2,00,000 × 9/12 = ₹1,50,000. Therefore, the difference in depreciation for the 1st year is ₹2,00,000 - ₹1,50,000 = ₹50,000.
Similar Questions
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Identify the correct pair of the causes of depreciation with its types.
A machine is purchased for Rs7,00,000. Expenses incurred on its cartage and installation Rs3,00,000. Calculate the amount of depreciation @ 20% p.a. according to Straight Line Method for the first year ending on 31st March, 2022, if this machine is purchased on 1st July, 2021.
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Which of the following statement is FALSE in relation to the term depreciation?
Which of the following statement is FALSE?
Which of the following statement is NOT TRUE in regard to reserve and provision?
Provision is _______ against profit.
Match the following.
Adjustment Treatment in balance sheet I. Depreciation 1. Shown on assets side II. Unexpired expenses 2. Shown on debited side III. Interest on capital 3. Deducted from values of assets IV. Manager’s commission 4. Shown as addition to capital
Important Questions from Depreciation, Reserve & Provision
For charging depreciation on which of the following assets, the depletion method is adopted?
Which of the following statements is true?
For depreciation on leasehold property, the appropriate method of depreciation is
Which of the following is not an example of Capital Reserve?
Ways of creating secret reserve
1. by supressing the sale
2. by undervaluing stock-intrade and goodwill
3. by charging excessive depreciation
4. by charging capital expenditure to Profit & Loss A/c
