A Plant & Machinery costing - 80,00,000 is depreciated on straight line basis assuming 10 year working life and zero residual value, for four…
CA Foundation · Accounting · MTP · June 2024
A Plant & Machinery costing - 80,00,000 is depreciated on straight line basis assuming 10 year working life and zero residual value, for four years. At the end of the fourth year, the machinery was revalued upwards by - 3,20,000. The remaining useful life was reassessed at 8 years. Calculate Depreciation for the fifth year.
Suggested Answer and Working Notes:
Calculation of depreciation for 5th year Depreciation per year charged for four years = 80,00,000 / 10 = 8,00,000 WDV of the machine at the end of fourth year = 80,00,000 - 8,00,000 × 4 = 48,00,000. Depreciable amount after revaluation = 48,00,000 +3,20,000 = 51,20,000 Remaining useful life as per previous estimate = 6 years Remaining useful life as per revised estimate = 8 years Depreciation for the fifth year and onwards = 51,20,000 / 8 = 6,40,000.
Topics: Depreciation and Amortisation
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