Practice Test

Original cost = Rs.1,26,000: Salvage value=6,000:Useful life = 6 years.Depreciation for the 2nd year @10% p.a.under wdv method

On April 01,2004 the debit balance of the machinery account of A Ltd.was Rs.5,67,000. the machine was purchased on April 01 , 2002.The company charged depreciation at the rate of 10 % p.a under diminishing balance method .On October 01,2004 , the company acquired a new machine at a cost of Rs.60,000 and incurred Rs.6,000 for the installation of the new machine. The company decided to change the system of providing depreciation from the diminishing balance method to the SLM with retrospective effect from April 01, 2002.The rate of depreciation will remain the same. The company decided to make necessary adjustment in respect of depreciation due to the change in the method in the year 2004-2005.Further Depreciation to be provided

date of purchase 01.01.2005 , purchase price of machine Rs.80,000 , Installation charges Rs.20,000 on 30th sept.2006 ,this machine was sold for Rs.50,000 depreciation is to provided @20% p.a according to WDV accounts are closed on 31st march each year .The loss on sale of machine is