Solve the problem

Rakesh,

it should be read as, "a machine of cost  120000/ is depreciated straightline for 3 years, assuming 10 yrs working life. It has zero residual value."

guess its clear. 

Thanks to all of you .....

Hi Rakesh

First split the question as

1.In the standpoint of 1st year Machine cost is Rs.1,20,000/- and the depreciation provided as straightline for Rs.12000/- each for 10 years.

2.In the standponit of 3rd year the useful period of assets are revised as 5 more years only (Totally 8 years) and Zero residual value.Hence balance unprovided depreciation of Rs.84000/- (1,20,000-12000-12000-12000), we have to provided in next 5 years as Rs.16,800/- (84000/5)

As per para 11 of AS - 6, If the Original estimated useful life undergoes any change, the unamortised depreciation should be charged to revenue over revised useful life. Therefore, For years 1, 2 and 3, depreciation would be s. 12000/- pa. For the rest five years depreciation would be Rs. 16,800/- pa.