A machinery costing ₹5,00,000 was purchased on 1st April. Depreciation is charged at per annum under the Written Down Value (WDV) method. What is the book value of the machinery at the end of Year 2?
Answer and explanation
Correct answer: A. ₹3,20,000
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- Step 1: Calculate the depreciation for Year 1. The initial cost of the machinery is ₹, and depreciation is charged at per annum under the Written Down Value (WDV) method :
- Step 2: Compute the written down value (book value) at the end of Year 1 :
- Step 3: Calculate the depreciation for Year 2 based on the opening book value of Year 2 :
- Step 4: Determine the book value of the machinery at the end of Year 2 :
Answer
₹3,20,000.
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