Question

On 1st July, 2020 Aqua Ltd purchased Machinery of Rs. 4,00,000. Depreciation is to be charged @10% p.a by diminishing balance method. What amount of depreciation will be charged for the year ending March 31, 2021?
(a) Rs.40,000
(b) Rs.20,000
(c) Rs.30,000
(d) Rs.70,000

Answer 1

(c) Rs.30,000

The term depreciation refers to an accounting method used to allocate the cost of a tangible or physical asset over its useful life or life expectancy. Depreciation shows how much of an

asset's value has been used up.

since, the depreciation for 1 year is 10 % of the value of machinery

hence, depreciation for 9 months would be

= 9/12 ×10/100 ×4, 00,000

= ₹30,000