A firm had purchased machinery on Ist April, 2017 of RS.8 lacs and Sold on Ist october, 2018 for Rs. 6 lacs. How much profit was earned by the firm (Note: charges depreciation at 20% per annum as per the written down value method)

A firm had purchased machinery on Ist April, 2017 of RS.8 lacs and Sold on Ist october, 2018 for Rs. 6 lacs. How much profit was earned by the firm (Note: charges depreciation at 20% per annum as per the written down value method)

Name: A firm had purchased machinery on Ist April, 2017 of RS.8 lacs andSol
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Description: A firm had purchased machinery on Ist April, 2017 of RS.8 lacs andSold on Ist october, 2018 for RS. 6 lacs. How much profit was earnedby the firm (Note: charges depreciation at 20% per annum as perthe written down value method)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.

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A firm had purchased machinery on Ist April, 2017 of RS.8 lacs and
Sold on Ist october, 2018 for RS. 6 lacs. How much profit was earned
by the firm (Note: charges depreciation at 20% per annum as per
the written down value method)

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