Question

Mr. R purchased a plant
A (15%) worth Rs.
2,00,000 on 1/5/2019.
However, this plant is
put to use on 1/12/2019.
What amount of
depreciation will be
allowed in this case?

Answer 1

Answer:

Explanation:

Mr. R purchased a plant  A (15%) worth Rs.  2,00,000 on 1/5/2019.

However, this plant is  put to use on 1/12/2019

The amount of depreciation will be applicable from the date of purchase. Plant purchased on 1 may 2019, but put to use in 1 December 2019.

The amount of depreciation is applicable from the 1 may 2019.

To calculate depreciation , we have to know the scrap value of the plant and machinery and the life of plant and machinery used.

Amount of depreciation = cost of machine -  scrap value / life in years.