A firm acquired machinery on 1st July 2019 at a cost of Rs 45,000 and spent Rs 5,000 for its installation. The firm writes off depreciation at 10% per annum on the diminishing balance method. The books are closed on 31 st March every year. Depreciation for the year ended 31st March 2020 & 31st March 2021 will be Rs_& Rs__.

3, 750, 5, 000

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4625, 3, 750

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3, 750, 4, 625

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5000, 3, 750

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Solution

The correct option is C $3, 750, 4, 625$
Depreciation for the end of the year:-
31st march 2012
(value of machinery will be cost of the machinery plus installation charges - 45,000 + 5,000)
= 50,000 x 10/100 x 9/12 ( 1st July 2011 to 31st march )
= 3,750.

31st march 2013 (depreciation for the full year)
= (50,000 - 3750) 46250 x 10/100
= 4,625.

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