Question

Wildcat Ltd, a manufacturing company sold a machinery for Rs 8 lacs at the year end.
company had purchased the machinery four years back for Rs 15 lacs and had depreciated the same
using written down value method of depreciation @ 20%. As an accounts executive of Wildcat Ltd,
calculate the WDV of the asset for the four years, accumulated depreciation for four years and
profit/loss on sale, if any

Answer 1

Answer:

WDV = 14.5%

Accumulated depreciation = 12

Profit = 4

Explanation:

The write down value (WDV), is the "net book value of an asset computed by deducting the accumulated depreciation or amortization from the value shown in the account books

The WDV of the asset for the four years is:

Rate of depreciation = 1 - (8/15)^(1/4) = 0.145.

WDV = Rate of depreciation(%) = 100 x 0.145 = 14.5 %.

Accumulated depreciation for four years was: 15×0.2×4 = 12.

Profit on sale is 12 - 8 = 4.