Question

Date of Purchase of Machine 1.4.2012, cost: Rs. 12,00,000, Rate of Depreciation: 10% p.a On Line Straight Line Basis. On 1.10.2014, a part of machinery purchased on 1.4.2012. for Rs. 80,000 was sold for Rs. 45,000. The closing balance of Provision for Depreciation Accounts as at 31.3.2015 will be:

• A. Rs. 1,20,000
• B. Rs. 2,28,000
• C. Rs. 3,10,000
• D. Rs. 3,36,000

Answer 1

The correct option is D Rs. 3,36,000

Balance in provision for depreciation account

= Depreciation on Existing machinery

= RS-3,36,000.

Working notes:-

Accumulated depreciation on old machinery from 1.4.2014 to 31.03.2015

(SLM basis)

= 11,20,000 x 10/100 x 3 years

= RS-3,36,000.