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    Question

    Cost of machine Rs.1,35,000. Residual value Rs. 5,000.

    Useful life is 10 years. The company charged depreciation for the first 5 years on straight line method. Later on, it reviewed the useful life and decided to take it as useful for another 8 years. Depreciation amount for 6th year will be:
    A Rs. 8,125 Correct Answer Incorrect Answer
    B Rs. 8,000 Correct Answer Incorrect Answer
    C Rs. 8,200 Correct Answer Incorrect Answer
    D None of the three Correct Answer Incorrect Answer

    Solution

    Date    Particulars     Amount          Amount Note: In case of revaluation, the depreciation is calculated on the total revalued amount over a period of balance useful lives assessed on the date of revaluation. New cost for the purpose of depreciation will be gross cost less accumulated depreciation on the date of revaluation.

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