Question

Q. X Ltd purchase a machine on 1st July 2020 for rs 50000 depreciation is to charge @10% pa. What will be the amount of depreciation if the books are closed on 31st march every year?

a) 5000
b) 3750
c) 10000
d) 4000
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Answer 1

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4000

Answer 2

Answer:

b) 3750

Explanation:

Note :

Depreciation = Cost of asset × rate of depreciation × number of years

Cost of asset ( machine ) = 50000

Rate of depreciation = 10% p.a

Number of years = 9months (july - March) = 9/12yr

Depreciation = 50000 × 10% × 9/12

=> Depreciation = 5000 × 9/12

=> Depreciation = 3750

Note

• only for this year depreciation will be 3750
• From 2nd year ( next year ) the depreciation will be considered for whole year