Question

Bharat Ltd. which depreciates its machinery at 10% p.a. on straight line basis, had on 15 April 2004 Rs.
94,000 to the debit of Machinery Account. On 318 March 2005, the company decided to change the
method of depreciation to diminishing balance method with effect from 1st April 2001, the rate of
depreciation remaining the same. Prepare the Machinery Account for the year 2004-2005.​

Answer 1

Answer:

Cost as on 01.04.2016 = Rs.28 000/0.70 = Rs. 40 000 A. Total Depreciation under Old Method = Rs.40 000 - Rs.28 000 = Rs.12 000 B. Total Depreciation under New Method = Rs.40 000 -[40 000 × 90% × 90% × 90%] = Rs.10 840 C. Excess Depreciation to be written back Rs.1 160