Q.

1
Plant and machinery comprising 4 machines
1.Original cost- Rs. 7, 4 and 2 lakhs respectively (Total Rs. 13 lakhs)
2.Accumulated depreciation till March, 2020- Rs. 3, 2 and 1 lakh respectively (Total Rs. 6 lakhs)
3.On January 1, 2021 a new machine costing Rs. 3 lakhs was purchased
4.On December 31, 2020 machine no. 4 was scrapped for Rs. 30,000
5.Calculate depreciation if company follows SLM method and life of the asset as per Companies’ Act i

*
Machine 1

original cost 7.00

Accumulated Depreciation 3.00
WDV as 1/4/2020 4.00

New purchase
Depreciation for 2020-21
9.50% p.a. on original cost (life 10 years)-See note below Period
on old machines retained Full year 0.67
on machine sold 9 months
on new machine 3 months
Total depreciation
WDV as on date of sale
Sale/scrap value
Loss on sale of asset debited
to Profit and loss

Note

Life of the asset is 10 years and scrap as per law is 5% of the cost 3.67
Hence 95% of the cost depreciated over 10 years onstraight line method, i.e. 9.50% per annum
vely (Total Rs. 6 lakhs)

asset as per Companies’ Act is 10 years

2 3 4 Total

4.00 2.00 13.00

2.00 1.00 6.00
2.00 1.00 7.00

3.00 3.00

0.38 1.05
0.14 0.14
0.07 0.07
1.26
0.86
0.30

0.56

2.38 0.07 6.12

50% per annum
Q. 2
Plant and machinery comprising 4 machines
1.Original cost- Rs. 7, 4 and 2 lakhs respectively(Total Rs. 13 lakhs)
2.Depreciation till March, 2020- Rs. 3, 2 and 1 lakh respectively (Total Rs. 6 lakhs)
3.On January 1, 2021 a new machine costing Rs. 3 lakhs was purchased
4.On December 31, 2020 machine no. 4 was scrapped for Rs. 30,000
5.Calculate depreciation as per Income Tax Rules if the rate of depreciaion is 15% for Plant and machin

*
Block of assets as on 1/4/2020
Original cost 13.00
Less: Depreciation till date 6.00
WDV as on 1/4/2020 7.00
Less: Sale proceeds on asset sold/scrapped 0.30
WDV of old block 6.70
Additions during the year 3.00
Total Block as on 31/3/2021 9.70

Depreciation for 2020-21

On old block @ 15% 1.01
On additions @ 7.5% since used for less than 180 days 0.23

Total depreciation as per Income Tax 1.23

WDV as on 31/3/2020 8.47

Rs. 6 lakhs)

ion is 15% for Plant and machinery block

Q.3

a)
b)
c)

d)
e)

f)

1)

2)
 ABC Ltd., a manufacturing concern, furnishes the following particulars:
Opening Written Down Value (WDV) of plant and machinery as on 1.4.2020 is Rs. 30,00,000
New plant and machinery purchased on 08.06.2020 – Rs. 20,00,000
Installation charges (installation done by regular workers of the company) estimated on the basis
of time devoted- Rs. 1,00,000. Installation was completed on 14.08.2020 and the machine was
put to use immediately
Another machinery acquired on 01.07.2020 – Rs. 8,00,000
Bank loan @ 12% p.a. availed for the above machinery on 01.06.2020 - Rs. 6,00,000 for
advance payment to supplier
Above machinery was put to use on 01.11.2020

Calculate
Normal and additional depreciation allowable for 2020-21-Rate normal-15%, additional - 20%

WDV as on March 31, 2021

*
WDV Additions Additions
1/4/2020 No. 1 No. 2
3,000,000 2,000,000 800,000

100,000 30,000
3,000,000 2,100,000 830,000

15% 15.00% 7.50% Normal @ 7.5% since machine put to use on 01/11/2020
450,000 315,000 62,250 Depreciation

20% 10% Additional depreciaion shall be allowed only to the extent of

420,000 83,000 10% in 2020-21 (since machinery put to use on 1/11/2020)
Balance additional depreciation Rs. 83,000 shall be allowed in
2021-22
Q. 4

An assessee imported an asset on January 1, 2020 for

CIF USD 10,000. The Supplier gave a credit period of 4
months. On due date the assessee remitted the money
to foreign supplier
On January 1, 2020 1 USD = Rs. 68
On May 1, 2020 1 USD = Rs. 70
Import duty paid @ 5% in India
Calculate normal depreciation for 2019-20 and 2020-21
as per the provisions of Income Tax assuming rate of
depreciation to be 15%
* *
Depreciation for 2019-20
USD Rs/USD Total Rs
Cost 10,000 68 680,000

Import duty @ 5% 34,000

Total 714,000
Depreciation @ 7.5%
since used for less than
180 days 53,550

Depreciation for 2020-21

WDV as on 1/4/2020 660,450
Forex fluctuation loss (loan)
May 1, 2020 (70-68) 10,000 2 20,000

Total cost/WDV 680,450

Depreciation @ 15%
Depreciation @ 15%-since used for more than
180 days 102,068
Q. 5

An assessee imported an asset on January 1, 2020

for CIF USD 50,000 and took a loan of USD 50,000
from a foreign bank repayable on June 30, 2020
Loan from foreign bank was repaid on due date

On January 1, 2020 1 USD = Rs. 68

On March 31, 2020 1 USD = Rs. 70
On June 30, 2020 1 USD = Rs. 72

Calculate normal depreciation for 2019-20 and 2020-21

as per the provisions of Income Tax assuming rate of
depreciation to be 15%
* *
Depreciation for 2019-20
USD Rs/USD Total Rs
Cost 50,000 68 3,400,000
Forex fluctuation loss (loan) - Not actually inurred
March 31, 2020 (70-68) 50,000 - - Actual repayment not made

Total 3,400,000
Depreciation @ 7.5%
since used for less than
180 days 255,000

Depreciation for 2020-21

WDV as on 1/4/2020 3,145,000
Forex fluctuation loss (loan)
June 30, 2020 (72-68) 50,000 4 200,000 Actual repayment made

Total cost/WDV 3,345,000

Depreciation @ 15%
since used for more than
180 days 501,750
ayment not made

ayment made
Q. 6
a)
b)
c)
On April 1, 2020 WDV of a block – Rs. 1,40,000 consisting of Plant A and B
On July 1, 2020 new plant C purchased for Rs. 1,00,000
On March 30, 2021 plant A and B are sold for Rs. 2,50,000
Calculate depreciation, short term capital gain\loss for the year 2020-21
*
140,000
100,000
-250,000
-10,000 Short term capital gain
Q. 7
a) On April 1, 2020 WDV of a block – Rs. 2,40,000 consisting of Plant A and B
b) On July 1, 2020 new plant C purchased for Rs. 1,00,000
c) On March 30, 2021 plant A, B and C sold for Rs. 2,00,000
Calculate depreciation, short term capital gain\loss for the year 2020-21
*
240000
100000
-200000
140000 Short term capital gain
 *
Q.8
Red Chillies Limited has a block of assets with WDV of Rs. 10 lakhs on April 1,
a) 2020 1,000,000 15%
b) It purchased further asset on January 1, 2021 for Rs. 2.80 lakhs. 280,000 7.50%
c) On March 1, 2021 it was amalgamated with Green Chillies Limited 1,280,000
d) All the assets in the block were transsferred to Green Chillies for Rs. 15 lakhs
e) Compute depreciation for Red Chillies and Green Chillies for 2020-21 WDV for Green Chillies
Calculate actual cost for amalgamated company for 2020-21 and WDV as on April
f) 1, 2021
Depreciation rate 15%
 59 31
Red Green Days of holding

150,000 137,260 12,740 Red-334 Green-31

21,000 13,767 7,233 Red-59 Green-31
151,027 19,973

1,260,027