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On 1st April 2018 machine was purchased for 20000 on 1st October 2019 another machine was purchased for 10000 and on 1st April 2020 one more machine was purchased for 5000 the form depreciates its machinery 10% per annum on the diminishing balance method what is the amount of depreciation for the year ended 31st March 2019 20 21 what will be the balance in machinery account as on 31st March 2021?
Most Upvoted Answer
On 1st April 2018 machine was purchased for 20000 on 1st October 2019 ...
Depreciation Calculation:

  • Machine purchased on 1st April 2018 = 20000

  • Depreciation for the year ended 31st March 2019 = 10% of 20000 = 2000

  • Machine purchased on 1st October 2019 = 10000

  • Depreciation for the year ended 31st March 2020 = 6 months depreciation on 20000 (i.e 1000) + 10% of 10000 = 2000

  • Machine purchased on 1st April 2020 = 5000

  • Depreciation for the year ended 31st March 2021 = 10% of (20000-2000) + 10% of 10000 + 10% of 5000 = 2000 + 1000 + 500 = 3500



Balance in Machinery Account:

  • Opening Balance on 1st April 2018 = 20000

  • Depreciation for the year ended 31st March 2019 = 2000

  • Net Book Value as on 31st March 2019 = 18000

  • Depreciation for the year ended 31st March 2020 = 2000

  • Net Book Value as on 31st March 2020 = 16000

  • Depreciation for the year ended 31st March 2021 = 3500

  • Net Book Value as on 31st March 2021 = 12500

  • Balance in Machinery Account as on 31st March 2021 = 12500



Explanation:

  • Depreciation is calculated at the rate of 10% per annum on the diminishing balance method.

  • The calculation of depreciation is done separately for each machine based on their respective purchase dates.

  • The balance in the Machinery Account is calculated by deducting the total depreciation from the cost of the machine.

  • The net book value of the machinery is the value of the machinery after deducting the accumulated depreciation from the cost of the machinery.

  • The balance in the Machinery Account as on 31st March 2021 is the net book value of all the machines combined.

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On 1st April 2018 machine was purchased for 20000 on 1st October 2019 another machine was purchased for 10000 and on 1st April 2020 one more machine was purchased for 5000 the form depreciates its machinery 10% per annum on the diminishing balance method what is the amount of depreciation for the year ended 31st March 2019 20 21 what will be the balance in machinery account as on 31st March 2021?
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