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A machine purchased on 1st April 2010 for Rs. 10,000 is showing a balance of Rs. 6,000 as on 1st April 2012 when depreciation is charged on S.L.M. basis. Now, company wants to switch over to W.D.V method by charging depreciation @ 20%. The amount of excess/ short depreciation of last two years will be
- a)Excess depreciation Rs.400
- b)Short depreciation Rs.400
- c)Excess depreciation Rs.1,600
- d)Short depreciation Rs.1,600
Correct answer is option 'A'. Can you explain this answer?
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Most Upvoted Answer
A machine purchased on 1st April 2010 for Rs. 10,000 is showing a bala...
In the first year amount of depreciation(2000) is same in both slm and wdv. Next year the amount of depreciation by slm method is rs.2000 and by wdv method (8000×20/100= 1600).The amount of depreciation is excess by rs.400.Hence,the first option is correct!
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A machine purchased on 1st April 2010 for Rs. 10,000 is showing a bala...
Depreciation calculation using S.L.M. method
The Straight Line Method (S.L.M.) of depreciation is a method of calculating depreciation wherein the cost of the asset is divided by the number of years it is expected to be in use.
- Cost of machine = Rs. 10,000
- Life of machine = 3 years
- Depreciation per year = Cost of machine / Life of machine = Rs. 10,000 / 3 = Rs. 3,333.33
- Depreciation for the year 2010-11 = Rs. 3,333.33
- Depreciation for the year 2011-12 = Rs. 3,333.33
- Accumulated depreciation as on 1st April 2012 = Rs. 3,333.33 + Rs. 3,333.33 = Rs. 6,666.66
- Book value of machine as on 1st April 2012 = Cost of machine - Accumulated depreciation = Rs. 10,000 - Rs. 6,666.66 = Rs. 3,333.34
Depreciation calculation using W.D.V. method
The Written Down Value (W.D.V.) method of depreciation is a method of calculating depreciation wherein the depreciation is charged as a percentage of the written down value of the asset.
- Book value of machine as on 1st April 2012 = Rs. 3,333.34
- Depreciation rate = 20%
- Depreciation for the year 2012-13 = Depreciation rate * Book value of machine = 20% * Rs. 3,333.34 = Rs. 666.67
- Written down value of machine as on 31st March 2013 = Book value of machine - Depreciation for the year 2012-13 = Rs. 3,333.34 - Rs. 666.67 = Rs. 2,666.67
Excess/short depreciation calculation
The excess/short depreciation is the difference between the amount of depreciation charged using S.L.M. method and W.D.V. method for the last two years.
- Depreciation charged using S.L.M. method for the year 2010-11 = Rs. 3,333.33
- Depreciation charged using S.L.M. method for the year 2011-12 = Rs. 3,333.33
- Total depreciation charged using S.L.M. method for the last two years = Rs. 3,333.33 + Rs. 3,333.33 = Rs. 6,666.66
- Depreciation charged using W.D.V. method for the year 2012-13 = Rs. 666.67
- Depreciation charged using W.D.V. method for the year 2013-14 = Depreciation rate * Written down value of machine as on 31st March 2013 = 20% * Rs. 2,666.67 = Rs. 533.33
- Total depreciation charged using W.D.V. method for the last two years = Rs. 666.67 + Rs. 533.33 = Rs. 1,200
- Excess/short depreciation = Total depreciation charged using S.L.M. method - Total depreciation
The Straight Line Method (S.L.M.) of depreciation is a method of calculating depreciation wherein the cost of the asset is divided by the number of years it is expected to be in use.
- Cost of machine = Rs. 10,000
- Life of machine = 3 years
- Depreciation per year = Cost of machine / Life of machine = Rs. 10,000 / 3 = Rs. 3,333.33
- Depreciation for the year 2010-11 = Rs. 3,333.33
- Depreciation for the year 2011-12 = Rs. 3,333.33
- Accumulated depreciation as on 1st April 2012 = Rs. 3,333.33 + Rs. 3,333.33 = Rs. 6,666.66
- Book value of machine as on 1st April 2012 = Cost of machine - Accumulated depreciation = Rs. 10,000 - Rs. 6,666.66 = Rs. 3,333.34
Depreciation calculation using W.D.V. method
The Written Down Value (W.D.V.) method of depreciation is a method of calculating depreciation wherein the depreciation is charged as a percentage of the written down value of the asset.
- Book value of machine as on 1st April 2012 = Rs. 3,333.34
- Depreciation rate = 20%
- Depreciation for the year 2012-13 = Depreciation rate * Book value of machine = 20% * Rs. 3,333.34 = Rs. 666.67
- Written down value of machine as on 31st March 2013 = Book value of machine - Depreciation for the year 2012-13 = Rs. 3,333.34 - Rs. 666.67 = Rs. 2,666.67
Excess/short depreciation calculation
The excess/short depreciation is the difference between the amount of depreciation charged using S.L.M. method and W.D.V. method for the last two years.
- Depreciation charged using S.L.M. method for the year 2010-11 = Rs. 3,333.33
- Depreciation charged using S.L.M. method for the year 2011-12 = Rs. 3,333.33
- Total depreciation charged using S.L.M. method for the last two years = Rs. 3,333.33 + Rs. 3,333.33 = Rs. 6,666.66
- Depreciation charged using W.D.V. method for the year 2012-13 = Rs. 666.67
- Depreciation charged using W.D.V. method for the year 2013-14 = Depreciation rate * Written down value of machine as on 31st March 2013 = 20% * Rs. 2,666.67 = Rs. 533.33
- Total depreciation charged using W.D.V. method for the last two years = Rs. 666.67 + Rs. 533.33 = Rs. 1,200
- Excess/short depreciation = Total depreciation charged using S.L.M. method - Total depreciation
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A machine purchased on 1st April 2010 for Rs. 10,000 is showing a balance of Rs. 6,000 as on 1st April 2012 when depreciation is charged on S.L.M. basis. Now, company wants to switch over to W.D.V method by charging depreciation @ 20%. The amount of excess/ short depreciation of last two years will bea)Excess depreciation Rs.400b)Short depreciation Rs.400c)Excess depreciation Rs.1,600d)Short depreciation Rs.1,600Correct answer is option 'A'. Can you explain this answer?
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A machine purchased on 1st April 2010 for Rs. 10,000 is showing a balance of Rs. 6,000 as on 1st April 2012 when depreciation is charged on S.L.M. basis. Now, company wants to switch over to W.D.V method by charging depreciation @ 20%. The amount of excess/ short depreciation of last two years will bea)Excess depreciation Rs.400b)Short depreciation Rs.400c)Excess depreciation Rs.1,600d)Short depreciation Rs.1,600Correct answer is option 'A'. Can you explain this answer? for CA CPT 2024 is part of CA CPT preparation. The Question and answers have been prepared according to the CA CPT exam syllabus. Information about A machine purchased on 1st April 2010 for Rs. 10,000 is showing a balance of Rs. 6,000 as on 1st April 2012 when depreciation is charged on S.L.M. basis. Now, company wants to switch over to W.D.V method by charging depreciation @ 20%. The amount of excess/ short depreciation of last two years will bea)Excess depreciation Rs.400b)Short depreciation Rs.400c)Excess depreciation Rs.1,600d)Short depreciation Rs.1,600Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA CPT 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A machine purchased on 1st April 2010 for Rs. 10,000 is showing a balance of Rs. 6,000 as on 1st April 2012 when depreciation is charged on S.L.M. basis. Now, company wants to switch over to W.D.V method by charging depreciation @ 20%. The amount of excess/ short depreciation of last two years will bea)Excess depreciation Rs.400b)Short depreciation Rs.400c)Excess depreciation Rs.1,600d)Short depreciation Rs.1,600Correct answer is option 'A'. Can you explain this answer?.
A machine purchased on 1st April 2010 for Rs. 10,000 is showing a balance of Rs. 6,000 as on 1st April 2012 when depreciation is charged on S.L.M. basis. Now, company wants to switch over to W.D.V method by charging depreciation @ 20%. The amount of excess/ short depreciation of last two years will bea)Excess depreciation Rs.400b)Short depreciation Rs.400c)Excess depreciation Rs.1,600d)Short depreciation Rs.1,600Correct answer is option 'A'. Can you explain this answer? for CA CPT 2024 is part of CA CPT preparation. The Question and answers have been prepared according to the CA CPT exam syllabus. Information about A machine purchased on 1st April 2010 for Rs. 10,000 is showing a balance of Rs. 6,000 as on 1st April 2012 when depreciation is charged on S.L.M. basis. Now, company wants to switch over to W.D.V method by charging depreciation @ 20%. The amount of excess/ short depreciation of last two years will bea)Excess depreciation Rs.400b)Short depreciation Rs.400c)Excess depreciation Rs.1,600d)Short depreciation Rs.1,600Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA CPT 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A machine purchased on 1st April 2010 for Rs. 10,000 is showing a balance of Rs. 6,000 as on 1st April 2012 when depreciation is charged on S.L.M. basis. Now, company wants to switch over to W.D.V method by charging depreciation @ 20%. The amount of excess/ short depreciation of last two years will bea)Excess depreciation Rs.400b)Short depreciation Rs.400c)Excess depreciation Rs.1,600d)Short depreciation Rs.1,600Correct answer is option 'A'. Can you explain this answer?.
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