Question

ABC Ltd. acquired a new Machine for Rs. $500,000$ on $1$st April $2013$ and spent Rs. $20,000$ on its installation and Rs. $5,000$ on transportation. The firm charges depreciation at $10\%$ on WDM method. The Machine will be capitalized at ____________.

• A. Rs. $5,10,000$
• B. Rs. $5,25,000$
• C. Rs. $5,00,000$
• D. Rs. $5,05,000$

Answer 1

The correct option is B Rs. $5,25,000$

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

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