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Question
An additional purchase of Rs. 2000 was made for a machine on 10th October. Under straight line method, under Income tax Act, depreciation __________.
An additional purchase of Rs. 2000 was made for a machine on 10th October. Under straight line method, under Income tax Act, depreciation __________.
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Solution
The correct option is A will be done for half of the year
Depreciation as per Income tax is calculated in a different manner than what is calculated under the Companies Act. In the given case, the machine has been added after the first six months from the beginning of the financial year. As per the income tax act, if a machine is added after the first six months, depreciation is calculated at 50% of the amount and at a rate specified by the act.(Note: Half of the year or 50% is one and the same)
Depreciation as per Income tax is calculated in a different manner than what is calculated under the Companies Act. In the given case, the machine has been added after the first six months from the beginning of the financial year. As per the income tax act, if a machine is added after the first six months, depreciation is calculated at 50% of the amount and at a rate specified by the act.
(Note: Half of the year or 50% is one and the same)
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