CSEET · Fundamentals of Accounting · Depreciation and Amortization
Gupta & Co. bought a machine on 1 July 2024 for Rs 2,40,000 and depreciates it at 10% p.a. on the WDV method, with accounts closed on 31 March. What is the depreciation for the year ended 31 March 2025, charged on a time basis?
The depreciation for the year is Rs 18,000. The machine was used for nine months, so the annual charge of Rs 24,000 (10% of Rs 2,40,000) is multiplied by 9/12, giving Rs 18,000 rather than the full-year figure.
- ARs 24,000
- BRs 18,000Correct
- CRs 12,000
- DRs 6,000
Explanation
The machine was used for 9 months (July to March). Depreciation = 2,40,000 × 10% × 9/12 = 18,000. Rs 24,000 is the full-year charge, which ignores the part-year use.
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