3) The balance of Machinery on 31st march, 2016 is Rs. 4, 86, 000. The machine was purchased on 1st April 2014. Depreciation is charged @ 10% p.a by diminishing balance method. Calculate the cost of machinery as on 1st April 2014.

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Solution

Dear Student,

Particulars Amount (in Rs)

Balance of Machinery as on 31 Mar 2016 486,000

Depreciation for the year on diminishing balance method 10%

So, Balance of Machinery as on 01 Apr 2015 540,000

Depreciation for the year on diminishing balance method 10%

So, Balance of Machinery as on 01 Apr 2014 / Cost of Machinery 600,000

Regards,

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Particulars	Amount (in Rs)
Balance of Machinery as on 31 Mar 2016	486,000
Depreciation for the year on diminishing balance method	10%
So, Balance of Machinery as on 01 Apr 2015	540,000
Depreciation for the year on diminishing balance method	10%
So, Balance of Machinery as on 01 Apr 2014 / Cost of Machinery	600,000