Question

16. Prabhu Deva purchased a machine for 10,00,000 on 1st July, 2015. It further purchased a
machine for 4,00,000 on 1st October, 2016. On 1st July, 2017, One-fifth of the machinery
purchased on 1st July, 2016 was sold at 80% of the book value.​

Answer 1

Given: Machine purchased for 10,00,000 on 1st July, 2015

          Another  machine purchased for 4,00,000 on 1st October, 2016

Explanation:

Calculation of amount of Depreciation on furniture for year 2015-16

Machinery purchased on 1st July 2015

Depreciation = Value of Asset x Rate of Depreciation x Period

Value of Asset = 10,00,000

Rate of Depreciation = 10%

Period = from 01/07/2015 to 31/03/2016 i.e. 9 months

(from the date of purchase/Beginning balance to the end of the financial year)

= 10,00,000 x $\frac{20}{100}$ x $\frac{9}{12}$

Depreciation = 75,000

Total Depreciation for the year = 75,000

Calculation of the amount of Depreciation on furniture for the year

2016-17

Machinery purchased on 1st July 2015

Depreciation = Value of Asset X Rate of Depreciation X Period

Value of Asset = 10,00,000

Rate of Depreciation = 10%

Period = from 01/04/2016 to 31/03/2017 i.e. 12 months

(from the date of purchase/Beginning balance to end of the financial year)

= 10,00,000 x $\frac{10}{100}$ x  $\frac{12}{12}$

Depreciation = 1,00,000

Machinery purchased on 1st October 2016

Depreciation = Value of Asset x Rate of Depreciation x Period

Value of Asset = 4,00,000

Rate of Depreciation = 10%

Period = from 01/10/2016 to 31/03/2017 i.e. 6 months

(from the date of purchase/Beginning balance to end of the financial year)

Depreciation = 20,000

Total Depreciation for the year  1,20,000

Calculation of amount of Depreciation on furniture for year 2017-18

Machinery purchased on 1st July 1/5 2015

Depreciation = Value of Asset x Rate of Depreciation x Period

Value of Asset = 8,00,000

Rate of Depreciation = 10%

Period = from 01/04/2017 to 31/10/2018 i.e. 12 months

(from the date of purchase/Beginning balance to end of the financial year)

= 8,00,000 X $\frac{10}{100}$ X $\frac{12}{12}$

Depreciation = 80,000

Machinery purchased on 1st October 2016

Depreciation = Value of Asset x Rate of Depreciation x Period

Value of Asset = 4,00,000

Rate of Depreciation = 10%

Period = from 01/04/2017 to 31/03/2018 i.e. 12 months

(from the date of purchase/Beginning balance to end of the financial year)

= 4,00,000 x $\frac{10}{100}$ x $\frac{12}{12}$

Depreciation = 40,000

Total Depreciation for the year = 1,20,000