Question

Plant purchase for contractor
R$ 6,50,000. Plant is used for contract
9 month. Life of Plant 5 year and
estimated scrap value Rs.50,000.
Amount of depreciation​

Answer 1

Given:

Price of plant purchased= Rs.6,50,000

Life of plant=5 year

Scrap value= Rs.50,000

To find:

The amount of depreciation

Solution:

We can find the amount by following the given steps-

We know that the amount of depreciation can be calculated by finding the depreciable value.

Depreciable value= Value of Plant- Scrap value

=Rs. 6,50,000- Rs. 50,000

=Rs. 6,00,000

Amount of depreciation per year= Depreciable value/ Life of plant

=6,00,000/ 5

Amount of depreciation=Rs. 1,20,000 per year

But the plant is used for 9 months only.

So, the amount of depreciation for 9 months= 9/12×Amount of depreciation

=3×1,20,000/4

=3×30,000

= Rs. 90,000

Therefore, the amount of depreciation is Rs.90,000.