On 1st Jan . 2007 a business man purchase a machine for RS 10,000 it was decided to depreciate it at 10 percentage per annum on straight line method . prepare machine Account and depreciation Account for three years
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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.
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