Answer to Question #122023 in Macroeconomics for sara

Question

SHUJA Pvt. Ltd. Purchased the following machines :
Machine – A was purchased on Jan 01, 2005 for Rs. 250,000.
Machine – B was purchased on May 01, 2005 for Rs. 350,000.
Machine – C was purchased on Sept 01, 2006 for Rs. 500,000.
All the above machines have no scrap value but estimated life of 10, 10 and 15 years respectively. Company follows Straight Line Method of depreciation for machine A and B and Diminishing Balance Method for machine C at 25% per annum. The accounting year ends on Dec. 31 each year. Machine-A was sold on Oct. 01, 2008 for cash Rs. 175,500.

Required :

Compute depreciation amount for the year ended Dec. 31, 2005, 2006 and 2007.
Show proper computation for machine-A sold.
Under what conditions, fixed assets may depreciate? Does the term ‘DEPRECIATION’also apply on land? Comment

Answer 1

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