Practice Test

B Ltd has been charging depreciation on the SLM basis .It charges a full year depreciation even if the machinery is utilized only for part of the year . An equipment which was purchased for Rs.3,50,000 now stands at Rs.2,97,500 after depreciating at the rate of 5% on a straight line basis . Now the company decides to change the methods of Depreciation with retrospective effect. The applicable reducing balance rate for this machinery would be 8%p.a.assuming that before the effect of this changes could be accounted , depreciation for the current year is already charged based on SLM and is reflected in the depreciated value of Rs.2,97,500. If 8% depreciation was charged by the reducing balance method , wdv at the end of 2nd year is

date of purchase 01.07.2006 , purchase price of machine Rs.80,000 , Installation charges Rs.20,000 ,residual value Rs.40,960 , useful life 4 years, accounting year --financial year; date when machine was put to use 1.10.2006 .The depreciation under WDV method for the year 06-07 will be

B Ltd which depreciates its machinery at 10% p.a. on diminishing balance method had on 1st April 2006 some balance to the debit of machinery account .It purchased a new machinery for Rs.1,90,000 on 1.8.20X6 & installed the same on 1.10.2006 after incurring Rs.10,000 .After providing depreciation ,the closing balance of Machinery account as at 31.3.2007 is Rs.10,64,800 .The original cost of old machines purchased on 1.4.2004 is