Question

4. On 1.1.2010, X Ltd, purchased a machinery for Rs. 68,000 and spent Rs. 2,000 on its erectio 1. On
1.7.2011, an additional machinery costing Rs. 20,000 was purchased. On 1.7.2012, the machine
purchased on 1.1.2010 was sold for Rs. 50,000 and on the same date, a new machine was purchased
at a cost of Rs. 50,000.
Show the Machinery Account for four years ending on 31.12.2013 under WDV method, taking the
rate of depreciation at 10 % p.a.​

Answer 1

Answer:

Refer to the attachment.

What is Depreciation?

Fall in the value of fixed tangible assets is known as depreciation.

Methods of Calculating Depreciation:

1. Straight line method- here, the amount of depreciation remains same every year.

2. Written down value method- here, the amount of depreciation decreases every year because depreciaton is charged on book value of asset instead of its historical cost.

The detailed solution for this question is given in the attachment.