A machinery is purchased for Rs. 10,000 on 1st April 2005. Depreciation @ 10% p.a. is provided. Calculate the amount of difference in depreciation as per SLM and WDV basis in the year 2006-07.

Rs. 1,000

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Rs. 100

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NIL

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Rs. 200

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Solution

The correct option is B Rs. 100
Depreciation on SLM Basis = 10,000 x 10/100
= RS-1,000.
Depreciation On WDV basis :-
1st year (2005-06)
= 10,000 x 10/100
= RS-1,000.
2nd year (2006-07)
= (10,000 - 1,000) 9,000 x 10/100
= RS-9,00.

Difference in depreciation = Depreciation in SLM - Depreciation in WDV
= 1,000 - 9,00
= RS-100.

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