A Machinery costing - 60,00,000 is depreciated on straight line assuming 10 years working life and nil salvage value for four years. At the end of…
CA Foundation · Accounting · MTP · September 2025
A Machinery costing - 60,00,000 is depreciated on straight line assuming 10 years working life and nil salvage value for four years. At the end of the fourth year, the machinery was revalued upwards by - 2,40,000. The remaining useful life of the machinery was also reassessed as 8 years at the end of the fourth year. Calculate the depreciation for 5th Year.
Suggested Answer and Working Notes:
Depreciation per year for first 4 years = 60,00,000 / 10 = 6,00,000 Thus, WDV of the Machinery at end of the 4th year = 60,00,000 – (₹ 6,00,000 x 4) = 36,00,000 Revalued Amount i.e. New Depreciable Amount shall be = 36,00,000 +2,40,000 = 38,40,000 Original remining useful life is (10 -4) = 6 Years whereas it is reassessed as 8 Years. Hence, depreciation for 5th Year = 38,40,000 / 8 = 4,80,000
Topics: Depreciation and Amortisation
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