Question

M/s Hot and Cold commenced business on 1st July 1977, when they purchased a new machinery at a
cost of Rs. 8,00,000. On 1st Jan. 1979, they purchased another machinery for Rs. 6,00,000 and again on 1st
Oct. 1981, machinery costing Rs. 15,00,000 was purchased. They adopted a policy of charging @ 20% p.a.
on diminishing balance basis.
On, 1st July 1981, they, however, changed the method of providing depreciation and adopted the
method of writing-off the Machinery Account at 15% p.a. under straight line method with retrospective
effect from 1st July 1977, the adjustment being made in the accounts for the year ended 30th June 1982.
The depreciation has been charged on timebasis.
You are required to calculate the difference in depreciation to be adjusted in the Machinery on 1st
July 1981, and show the Machinery Account for the year ended 30th June 1982.​

Answer 1

Explanation:

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