Question

Date of Purchase of Machine 1.4.2012, Cost: Rs. 12,00,000, Rate of Depreciation: 10% p.a. Straight Line Basis. On 1.10.2014, a new machinery was purchased for Rs. 80,000. The closing balance of Provision for Depreciation Account as at 31.3.2015 will be:

• A. Rs. 1,20,000
• B. Rs. 2,28,000
• C. Rs. 3,25,200
• D. Rs. 3,64,000

Answer 1

Answer: (D)

Rs. 3,64,000

Balance in provision for depreciation account

= accumulated depreciation on Machinery from 1.4.2014 to 31.03.2015

(3 years) + depreciation on new machinery

= 3,60,000 (WN-1) + 4,000 (WN-2)

= Rs. 3,64,000.

Working notes:-

1. Accumulated depreciation on old machinery from 1.4.2014 to 31.03.2015

(SLM basis)

= 12,00,000 x 10/100 x 3 years

= Rs. 3,60,000.

2. Depreciation on new machinery :-

= Rs. 80,000 x 10/100 x 6/12 (October to march)

= Rs. 4,000.