Question

An additional purchase was made for machine on 15.06.2009, under straight line method_________________________.

• A. depreciation will be changed from the date of purchase
• B. depreciation will be charged from the beginning of the year
• C. both a & b
• D. none of the above

Answer 1

The correct option is A depreciation will be changed from the date of purchase

Additional purchase of an asset is also a cost to the company and hence if a machinery is purchased in the middle of the year it will be calculated from the date of purchase onward and not the beginning of the year.

In given case, it is purchased on 15.06.09, depreciation will be caculated for 50% in June and 100% in the other months till the end of the accounting year.