A Company purchased a second hand plant for 3 30,000. It immediately spent on it * 5,000. The plant was put to use on 1.1.2019. After having used it for 6 years it was sold for 15,000. You are required to prepare the Plant Account for all the six years, providing depreciation at 10% p.a. on original cost.
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Cost of Plant = Rs 50,000
Useful life = 10 years
Residual value = Rs 5000
Depreciation = Cost-Residual value/Estimated useful life
=50,000-5,000/10
=45000/10
=4500
Also,
rate of depreciation = Annual depreciation/cost of plant x 100
= 4500/50,000 x 100
= 9%
Explanation:
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