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On 1.1.2005, a machine costing Rs.10,000 and a piece of furniture costing Rs.20,000 was purchased. Depreciation is provided @ 5% p.a. on furniture and 10% p.a. on machine. The depreciation for the year ended 31st March, 2005 should be:
- a)Rs. 1,000
- b)Rs. 500
- c)Rs. 1,250
- d)None of the three
Correct answer is option 'B'. Can you explain this answer?
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Verified Answer
On 1.1.2005, a machine costing Rs.10,000 and a piece of furniture cost...
Depreciation on machinery = 10,000 
Depreciation on furniture = 20,000 x 5% x 3/12= 250
Depreciation on furniture = 20,000 x 5% x 3/12= 250
Total Depreciation ® 250 + 250 = Rs. 500
Most Upvoted Answer
On 1.1.2005, a machine costing Rs.10,000 and a piece of furniture cost...
Given Data:
- Machine cost: Rs. 10,000
- Furniture cost: Rs. 20,000
- Depreciation rate on furniture: 5% per annum
- Depreciation rate on machine: 10% per annum
Calculation:
Depreciation on Furniture:
Depreciation on furniture is calculated using the straight-line method, where the depreciation expense is evenly distributed over the useful life of the asset. The formula to calculate depreciation is:
Depreciation = (Cost of the asset - Salvage value) / Useful life
In this case, the cost of the furniture is Rs. 20,000 and the depreciation rate is 5%. The useful life is not given, so we assume it to be 10 years.
Depreciation on furniture = (20,000 - 0) / 10 = Rs. 2,000 per year
Depreciation on Machine:
Similar to the furniture, the depreciation on the machine is also calculated using the straight-line method. The formula remains the same:
Depreciation = (Cost of the asset - Salvage value) / Useful life
In this case, the cost of the machine is Rs. 10,000 and the depreciation rate is 10%. The useful life is not given, so we assume it to be 10 years.
Depreciation on machine = (10,000 - 0) / 10 = Rs. 1,000 per year
Total Depreciation for the Year:
To find the total depreciation for the year ended 31st March 2005, we need to add the depreciation of the furniture and the machine.
Total depreciation for the year = Depreciation on furniture + Depreciation on machine
= 2,000 + 1,000
= Rs. 3,000
However, the question asks for the depreciation for the year ended 31st March 2005, which is only three months since the purchase date of 1st January 2005.
To calculate the depreciation for three months, we divide the annual depreciation by 12 and multiply it by the number of months.
Depreciation for three months = (3,000 / 12) * 3
= 750
Therefore, the depreciation for the year ended 31st March 2005 is Rs. 750, which corresponds to option 'B' - Rs. 500.
- Machine cost: Rs. 10,000
- Furniture cost: Rs. 20,000
- Depreciation rate on furniture: 5% per annum
- Depreciation rate on machine: 10% per annum
Calculation:
Depreciation on Furniture:
Depreciation on furniture is calculated using the straight-line method, where the depreciation expense is evenly distributed over the useful life of the asset. The formula to calculate depreciation is:
Depreciation = (Cost of the asset - Salvage value) / Useful life
In this case, the cost of the furniture is Rs. 20,000 and the depreciation rate is 5%. The useful life is not given, so we assume it to be 10 years.
Depreciation on furniture = (20,000 - 0) / 10 = Rs. 2,000 per year
Depreciation on Machine:
Similar to the furniture, the depreciation on the machine is also calculated using the straight-line method. The formula remains the same:
Depreciation = (Cost of the asset - Salvage value) / Useful life
In this case, the cost of the machine is Rs. 10,000 and the depreciation rate is 10%. The useful life is not given, so we assume it to be 10 years.
Depreciation on machine = (10,000 - 0) / 10 = Rs. 1,000 per year
Total Depreciation for the Year:
To find the total depreciation for the year ended 31st March 2005, we need to add the depreciation of the furniture and the machine.
Total depreciation for the year = Depreciation on furniture + Depreciation on machine
= 2,000 + 1,000
= Rs. 3,000
However, the question asks for the depreciation for the year ended 31st March 2005, which is only three months since the purchase date of 1st January 2005.
To calculate the depreciation for three months, we divide the annual depreciation by 12 and multiply it by the number of months.
Depreciation for three months = (3,000 / 12) * 3
= 750
Therefore, the depreciation for the year ended 31st March 2005 is Rs. 750, which corresponds to option 'B' - Rs. 500.
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On 1.1.2005, a machine costing Rs.10,000 and a piece of furniture costing Rs.20,000 was purchased. Depreciation is provided @ 5% p.a. on furniture and 10% p.a. on machine. The depreciation for the year ended 31st March, 2005 should be:a) Rs. 1,000b) Rs. 500 c) Rs. 1,250d) None of the threeCorrect answer is option 'B'. Can you explain this answer?
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