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प्रश्न
A firm purchased a plant for ₹ 40,000. Erection charges amounted to ₹ 2,000. The effective life of the plant is 5 years. Calculate the amount of depreciation per year under the straight-line method.
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उत्तर
Calculation of the amount of depreciation
Amount of depreciation = `("Original cost" - "Scrap value")/"Estimated life"`
Original cost = Purchase of plant + Erection charges
= ₹ 40,000 + ₹ 2,000 = ₹ 42,000
Estimated life = 5 years = `(₹ 42,000 - 0)/(5 "years")` = ₹ 8,400
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संबंधित प्रश्न
Write the word/term/phrase which can substitute the following statement:
The method of depreciation in which the total depreciation is equally spread over the life of the asset.
Select the most appropriate answer from the alternatives given below and rewrite the sentence:
The amount of depreciation reduces year after year under ______
State whether the following statement is True or False with reasons:
Wages paid for installation of Machinery are debited to Wages A/c.
State whether the following statement is True or False with reasons:
Depreciation is charged on Current Assets only.
Complete the following sentence:
Depreciation = `"Cost of asset - _____________"/"Estimated Working Life of the Asset"`
Under the written-down value method of depreciation, the amount of depreciation is ______.
What is sinking fund method?
State the limitations of written down value method of depreciation.
Distinguish between straight-line method and written down value method of providing depreciation.
Raj & Co purchased a machine on 1st January 2014 for ₹ 90,000. On 1st July 2014, they purchased another machine for ₹ 60,000. On 1st January 2015, they sold the machine purchased on 1st January 2014 for ₹ 40,000. It was decided that the machine be depreciated at 10% per annum on the diminishing balance method. Accounts are closed on 31st December every year. Show the machinery account for the years 2014 and 2015.
