If a machine is purchased worth Rs. 1,00,000 and the depreciation is charges @ 10 % per annum by strait line method. The company wish to change the method and adopt diminishing balance method with the same rate of depreciation. If the method changed from the first year, what excess depreciation should be adjusted in 3rd year?
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Answer:
Depreciation on SLM Basis = 10,000 x 10/100
= RS-1,000.
Depreciation On WDV basis :-
1st year (2005-06)
= 10,000 x 10/100
= RS-1,000.
2nd year (2006-07)
= (10,000 - 1,000) 9,000 x 10/100
= RS-9,00.
Difference in depreciation = Depreciation in SLM - Depreciation in WDV
= 1,000 - 9,00
= RS-100.
Explanation:
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