Depreciation doubt....

Hi friends..

I have a doubts please clarify it...

1) A company purchased a machinery on April01,2000 forRs.1,50,000.It is estimated that the machinery will have a useful life of 5 years after which it will have no salvage value.If the depreciation charged during the year 2004-2005 was....

a)Rs.50000   b)Rs.40000    c)30000   d)10000

2)An asset was purchased for Rs.1,00,000 on which depreciation was provided @ 15% on S.L.M.method,the W.D.V.of the asset at the end of two years is

a)70000          b)85000          c)15000    d)72250.

Reply with solutions please..............

Replies (11)

30000 for the yr 2004-2005 as per SLM

72250 

1.Depreciation = (150000-0) / 5= 30000



2. after  1st yr  wdv value= (100-15)% * 100000=85000

  after 2nd year wdv value= 85% * 85000 = 72250

Originally posted by : nisha

72250 

but the given answer is 70000

Sorry answer to 2nd question is

Depreciation in each year is =15%* 100000=15000

WDV value after 2 yrs = 100000-2*15000=70000

as per slm the wdv at the end is 70000

answer of 2nd question will be 70000 using s.l.m. method

and 1st question answer will be 20000 rupees

agreewith future ca

Solution for 1st question

Depri = 150000 - 0 / 5 =30000

So depri for each year will be Rs. 30000 / -

Solution for 2nd question

WDV value after two years will be Rs. 70000 / -

Hi friends, the answer to 1st question is Rs. 30,000 as per SLM method. the question has given only useful life and nothing else. so u can not apply sum of years' digit method.  and 

Dep. p.a as per SLM = Historical cost - Scrap Value

                                          Estimated useful life

                                    = 1,50,000 - NIL

                                             5

                                   = Rs. 30,000 p.a

under SLM, depreciation p.a remains the same so the answer is Rs. 30,000

Regards, CA Shakuntala Chhangani

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