Question

Date of Purchase of Machine 1.4.2012, cost: Rs. 12,00,000, Rate of Depreciation: 10% p.a. on Written Down Value 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. 3,29,200
• D. Rs. 3,60,000

Answer 1

Answer: (C)

Rs. 3,29,200

Balance in provision for depreciation account

= accumulated depreciation on Machinery from 1.4.2014 to 31.03.2015

(3 years) + depreciation on new machinery

= (1,20,000 + 1,08,000 + 97,200) + 4,000

= RS-3,29,200.

Working notes:-

1) Accumulated depreciation on old machinery from 1.4.2014 to 31.03.2015

(WDV basis)

Depreciation for 1st year:-

= 12,00,000 x 10/100

= RS-1,20,000.

Depreciation for 2nd year:-

= (12,00,000 - 1,20,000) 10,80,000 x 10/100
= RS-1,08,000.

Depreciation for the 3rd year :-

=(10,80,000 - 1,08,000) 9,72,000 X 10/100

= RS-97,200.

2) Depreciation on new machinery :-

= RS-80,000 x 10/100 x 6/12 (October to march)

= RS-4,000.