Question

Date of purchase 1st July, Purchase Price of Machine Rs. 80,000, Installation Charges Rs. 20,000, Residual Value Rs. 40,960, Usefullife 4 years, Accounting year - financial year. Date when Machine was put to use- 1st Oct. Depreciation under WDV method for the first year will be:

• A. Rs. 20,000
• B. Rs. 15,000
• C. Rs. 10,000
• D. None of these

Answer 1

The correct option is C Rs. 10,000

Here , formula for WDV is - deprecciation rate = 100 * (1-n√s/c)

where n = number of years , s = salvage value , c = cost of asset

=[1-4√40960/100000] * 100

= [1-4√0.4096] * 100

= [1-.80]*100

=.20*100

=20

1st year WDV = 100000*20%=20000

but it is purchased on july , so 20000*6/12=10000