Depreciation Calculation on WDV Method

Introduction
Depreciation is the allocation of the cost of an asset over its useful life. The Written Down Value (WDV) method is a commonly used method to calculate depreciation. In this method, the depreciation is calculated on the basis of the reducing balance of the asset.

Given Information
- Machine purchased on 1st April 2007 for RS.500000
- Machine purchased on 1st October 2007 for RS.200000
- Depreciation rate: 20% per annum

Step 1: Calculate the depreciation for each year
To calculate the depreciation, we need to determine the value of the machine at the beginning of each year. Since the machine was purchased on different dates, we need to calculate the depreciation separately for each period.

Year 1: April 2007 to March 2008
- Machine value at the beginning: RS.500000
- Depreciation for the year: 20% of RS.500000 = RS.100000
- Machine value at the end: RS.500000 - RS.100000 = RS.400000

Year 2: April 2008 to March 2009
- Machine value at the beginning: RS.400000
- Depreciation for the year: 20% of RS.400000 = RS.80000
- Machine value at the end: RS.400000 - RS.80000 = RS.320000

Year 3: April 2009 to March 2010
- Machine value at the beginning: RS.320000
- Depreciation for the year: 20% of RS.320000 = RS.64000
- Machine value at the end: RS.320000 - RS.64000 = RS.256000

Year 4: April 2010 to March 2011
- Machine value at the beginning: RS.256000
- Depreciation for the year: 20% of RS.256000 = RS.51200
- Machine value at the end: RS.256000 - RS.51200 = RS.204800

Step 2: Calculate the total depreciation
To calculate the total depreciation, we need to sum up the depreciation for each year.

Total depreciation = RS.100000 + RS.80000 + RS.64000 + RS.51200 = RS.295200

Step 3: Calculate the written down value (WDV)
The written down value is the value of the asset after deducting the total depreciation from the initial cost.

WDV = Initial cost - Total depreciation
WDV = RS.500000 + RS.200000 - RS.295200
WDV = RS.404800

Conclusion
The depreciation on the machine, calculated using the Written Down Value (WDV) method, is RS.295200. The written down value of the machine after deducting the total depreciation is RS.404800. This method allows for a higher depreciation charge in the initial years, reflecting the higher wear and tear of the asset, and gradually reduces the depreciation charge in subsequent years.