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CMA Foundation · Fundamentals of Financial and Cost Accounting · Depreciation (Straight Line and Diminishing Balance Methods)

Gupta & Co. purchased a machine on 1 July 2023 for Rs 3,00,000 and depreciates at 20% p.a. on diminishing balance, accounts closing on 31 March. What is the depreciation for the year ended 31 March 2024?

Depreciation for the year ended 31 March 2024 is Rs 45,000. The machine was in use for nine months, so the annual charge of 20% on Rs 3,00,000, which is Rs 60,000, is time-apportioned by 9/12.

  1. ARs 60,000
  2. BRs 45,000Correct
  3. CRs 15,000
  4. DRs 48,000

Explanation

The machine was used for 9 months (July to March). Depreciation = 3,00,000 × 20% × 9/12 = 45,000. Rs 60,000 ignores the part-year use.

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