M/s Mehra and Sons acquired a machine for `Rs`. 1,80,000 on October 01,2016 and spent `Rs`. 20,000 for its installation. The firm writes -off depreciation at the rate of `10%` on original Account and Depreciation Account ofr first three years given that :
(i) The book of accounts closes on March 31 every year, and
(ii) The firm charges depreciation to aseset account.

Explanation

Deprecation , Provisions and Reserves

Working Notes
(1) Calculation of roiginal cost of the machine
`{:(,"(Rs.)"),("Puchase cost","1,80,000"),("Add Installation cost",underline"20,000"),("Original cost","20,00,000"):}`
(2) Dpreciation expense `= 10%` of Rs. 2,00,000 every year
`" " =Rs. 20,000` p.a.
(2) During the year 2016, depreciation shall be charged only for 6 months, as acquisition date is October 01,2016, i.e.c., the asset is used only for 6 months druing the year 2016-17
Depreciation (2016-17)=Rs. 20,000 `xx(6)/(12)=Rs. 10,000`