Question

Basaria Confectioner bought a cold storage plant on July 01, 2014 for Rs.1,00,000.
Compare the amount of depreciation charged for first three years using:
1. Rate of depreciation $@$ 10$\%$ on original cost basis;
2. Rate of depreciation $@$ on written down value basis;
3. Also, plot the computed amount of depreciation on a graph.

Answer 1

here is my answer

Explanation:

i 299

ii 667

iii 9976

Answer 2

1.Total Depreciation for 3 years = Rs.27,500

2.Total Depreciation for 3 years = Rs.25,075

Explanation:

*Note: It has been assumed that the Financial year starts on 1st April and ends at 31st March.

1.Calculation of Depreciation @10% p.a on Original cost basis

Depreciation =     From 1.7.14 to 31.3.2015

                          = $1,00,000 \times 10\% \times \dfrac{9}{12}$

                          = Rs.7500

                               

                             From 1.4.15 to 31.3.2016

                           = $1,00,000 \times 10\%$

                           = Rs.10,000

                            From 1.4.16 to 31.3.2017

                           = $1,00,000 \times 10\%$

                           = Rs.10,000

Total Depreciation = $7500 + 10,000 + 10,000$

                               = Rs.27500

2.Calculation of Depreciation @10% p.a on Diminishing Balance method

Depreciation =           From 1.7.14 to 31.3.2015

                               = $1,00,000 \times 10\% \times \dfrac{9}{12}$

                               = Rs.7500

                                  From 1.4.15 to 31.3.16

                                   = $(1,00,000 - 7500) \times 10\%$

                                   = Rs.9,250

                                 From 1.4.16 to 31.3.17

                                   = $(1,00,000 -7500-9250) \times 10\%$

                                   = Rs.8325

Total Depreciation = $8325+9250+7500$

                               = Rs.25075