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# 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% per annum 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 installation of the new machine. The company decided to change the system of providing depreciation from the diminishing balance method to the straight-line method with retrospective effect from April 01, 2002. The rate of depreciation will remain the same.The company decided to make necessary adjustments in respect of depreciation due to the change in the method in the year 2004-2005. Q.Depreciation provided in 2002-03 = ______.a)Rs 56,700b)Rs 63,000c)Rs 70,000d)Rs 77,778Correct answer is option 'C'. Can you explain this answer?

## CA Foundation Question

By Srikanth Peddapally · Nov 15, 2019 ·CA Foundation
Samira Khanna answered Jun 29, 2018
Balance on 1april ,2004is 567000 . it means that credit balance on 31march ,2004 is also 567000. let the balance on 1april 2003 be x. then depreciation will be 10%of x i.e. 10x ÷100= x/10 from this we can understand that x- x/10 =567000 . here we found thae value of which is 630000. same process we will follow for the year 2002 to 2003 x-x/10=630000 and value of x is 700000. so depreciation will be 10% of 7lack that 70000

Freedom Institute answered 2 days ago
Balance on 1april ,2004is 567000 .
it means that credit balance on 31march ,2004 is also 567000.
let the balance on 1april 2003 be x.
then depreciation will be 10%of x i.e.
10x ÷100= x/10 from this we can understand that x- x/10 =567000 .
here we found thae value of which is 630000.
same process we will follow for the year 2002 to 2003 x-x/10=630000 and value of x is 700000.
so depreciation will be 10% of 7lack that 70000

Shriniwasan Iyar answered 3 days ago
Balance on 1april ,2004is 567000 .
it means that credit balance on 31march ,2004 is also 567000.
let the balance on 1april 2003 be x.
then depreciation will be 10%of x i.e.
10x ÷100= x/10 from this we can understand that x- x/10 =567000 .
here we found thae value of which is 630000.
same process we will follow for the year 2002 to 2003 x-x/10=630000 and value of x is 700000.
so depreciation will be 10% of 7lack that 70000

Kanwal Preet answered 3 days ago
Balance on 1april ,2004is 567000 .
it means that credit balance on 31march ,2004 is also 567000.
let the balance on 1april 2003 be x.
then depreciation will be 10%of x i.e.
10x ÷100= x/10 from this we can understand that x- x/10 =567000 .
here we found thae value of which is 630000.
same process we will follow for the year 2002 to 2003 x-x/10=630000 and value of x is 700000.
so depreciation will be 10% of 7lack that 70000