Question

On 1st October 2019 Sultan Ltd purchased Machinery of Rs.8,00,000 and charged depreciation @10% p.a by SLM. On the same date Dangal Ltd. also purchased same Machinery and charged depreciation @10% p.a by WDV. The amount of depreciation for the year ending March 31,2021 for both the firms will show :-
(a) Same amount of Depreciation will be charged
(b) Depreciation charged by Sultan Ltd. will be Rs.8,000 more than Dangal Ltd.
(c) Depreciation charged by Sultan Ltd. will be Rs.4,000 more than Dangal Ltd.
(d) Depreciation charged by Sultan Ltd. will be Rs.8,000 less than Dangal Ltd.

Answer 1

Answer:

Option (c) Depreciation charged by Sultan Ltd. will be Rs. 4,000 more than Dangal Ltd.

Answer 2

(b) Depreciation charged by Sultan Ltd. will be Rs.8,000 more than Dangal Ltd.

depreciation of Sultan Ltd. :

first year= 1/10 of 8,00,000

=80,000

second year = 80,000

dep. for Dangal Ltd. :

first year = 10% of 8,00,000 = 80,000

second year = 10% of (8,00000-80, 000)

= 10% of 7,20,000

= 72000

now,

the difference in the Depreciation charged by Sultan Ltd and the depreciation charged by Sultan Ltd. in the second year

= 80,000-72000

= 8,000

hence, Dangal Ltd. using written down value method for calculating of depreciation would be having ₹ 8,000 less than the amount charged by Sultan Ltd.