Bros. acquired a machine on Ist Julv 2004 at a cost of Rs. 14,000 and spent Rs. 1,000 on installation. The firm writes off depreciation at 10% every year. The books are closed on 31st decmber every year. Show the Machiners Account and calculation of depreciation on diminishing balance method for the year 2004-2005.
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Cost of machine = Acquired cost + Expenses = 14000+1000 = 15000
Machine is purchased on 1st july 2004
depreciation to be charged till 31st dec 2004 = 15000 * 10% * 6/12 = 750
depreciation to be charged till 31st dec 2005 = 14250 * 10% + 750 = 1425+750
so, the depreciation to be charged till 2004-2005 is 2175
Book value of machine as on 1st jan 2005 is 12,825
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