Advertisements
Advertisements
Question
Calculate the rate of depreciation under straight-line method from the following information:
Purchased second-hand machinery on 1.1.2018 for ₹ 38,000
On 1.1.2018 spent ₹ 12,000 on its repairs
Expected useful life of the machine is 4 years
Estimated residual value ₹ 6,000.
Advertisements
Solution
Original cost = Purchase of machinery + repair charges
= 38,000 + 12,000
= 50,000
Residual value = 6,000
Estimated life = 4 years
Amount of depreciation = `("Original cost" - "Scrap value")/"Estimates life"`
`= (50,000 - 6,000)/(4 "years")`
`= (44,000)/4`
= ₹ 11,000
Rate of depreciation = `"Amount of depreciaton"/"Original cost" xx 100`
= `(11,000)/(50,000) xx 100`
= 22%
APPEARS IN
RELATED QUESTIONS
Answer in One Sentence only:
What is a ‘Scrap Value’ of an asset?
Write the word/term/phrase which can substitute the following statement:
Excess of Selling price of fixed asset over its Written Down Value.
Complete the following sentence:
In Fixed Instalment System the amount of depreciation is ______ every year.
Under straight-line method, the amount of depreciation is ______.
Give the formula to find out the amount and rate of depreciation under straight line method of depreciation.
Furniture was purchased for ₹ 1,00,000 on 1.7.2016. It is expected to last for 5 years. Estimated scrap at the end of five years is ₹ 10,000. Find out the rate of depreciation under the straight-line method.
Furniture costing ₹ 5,000 was purchased on 1.1.2016, the installation charges being ₹ 1,000. The furniture is to be depreciated @ 10% p.a. on the diminishing balance method. Pass journal entries for the first two years.
A firm acquired a machine on 1st April 2015 at a cost of ₹ 50,000. Its life is 6 years. The firm writes off depreciation @ 30% p.a. on the diminishing balance method. The firm closes its books on 31st December every year. Show the machinery account and depreciation account for three years starting from 1st April 2015.
Which of the following methods charges an equal amount of depreciation every year?
The Double Declining Balance Method applies depreciation:
