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Standard XII

Accountancy

Cash Flow from Investing Activities

A new machine...

Question

A new machine costing Rs 1,00,000 was purchased by a company on 1st April, 2011. Its useful life is estimated to be 5 years and scrap value at Rs 10,000. The production hours for the next 5 years is as follows.
Year Hours
2011 - 2012 5,000
2012 - 2013 10,000
2013 - 2014 12,000
2014 - 2015 20,000
2015 - 2016 25,000

What will be the depreciation for year 2013 - 2014?

25, 000

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15, 000

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12, 500

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6, 250

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Solution

The correct option is B $15, 000$
Depreciation = Depreciable value x production hours
---------------------------------------------------------
Total production hours

= 90,000 x 12,000
---------------------------
72,000 (WN)

= 15000

Working notes :-
Depreciable value = 100000-10000
= 90000
Total production hours = 5,000 + 10,000 + 12,000 + 20,000 + 25,000
= RS 72,000

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