Question

ABC Ltd, acquired a new Machine for Rs. $500,000$ on $1$st April $2010$ and spent Rs. $20,000$ on its installation and Rs. $5,000$ on transportation. The firm charges depreciation at $10\%$ on WDM method. The depreciation charges for 2010-11 will be ___________.

• A. Rs. $50,000$
• B. Rs. $52,500$
• C. Rs. $47,250$
• D. Rs. $47,650$

Answer 1

The correct option is B Rs. $52,500$

Depreciable cost of machine = Purchase cost + Installation cost + Transportation

Depreciable cost of machine = Rs. 5,00,000 + Rs. 20,000 + Rs. 5,000 = Rs. 5,25,000

Depreciation of 2010-11 =Rs. 5,25,000 x 10% = Rs. 52,500