Question

Date of purchase 1st July, Purchase Price of Machine Rs. 80,000, Installation Charges Rs. 20,000. Residual Value Rs. 40,960. Useful life 4 years, Accounting year - financial year. The 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 B Rs. 15,000

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*9/12 = 15000