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.
Rs1,50,000
The correct answer is option 1. The total cost of the machine is Rs7,00,000 + Rs3,00,000 = Rs10,00,000. Depreciation for the first year = 20% of Rs10,00,000 = Rs2,00,000. However, since the machine was purchased on 1st July, 2021, for the first year, depreciation is charged for 9 months (from July 1st to March 31st). Therefore, the depreciation for the first year = Rs2,00,000 × 9/12 = Rs1,50,000.
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Which of the following statements is true?
For depreciation on leasehold property, the appropriate method of depreciation is
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1. by supressing the sale
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