On Ist April, 2020, Starex purchased a machine costing ₹ 4,00,000 and spent ₹ 50,000 on its installation

On Ist April, 2020, Starex purchased a machine costing ₹ 4,00,000 and spent ₹ 50,000 on its installation. The estimated life of the machinery is 10 years, after which its residual value will be ₹ 50,000. Find the amount of annual depreciation according to the Fixed Instalment Method and prepare Machinery Account for the first three years. The books are closed on 31st March every year.

[Annual Depreciation-₹ 40,000; Balance of Machinery A/c on 1st April,2023-₹ 3,30,000.]

Hint: Depreciation = (₹ 4,00,000+ ₹ 50,000 -₹ 50,000)/10= ₹ 40,000 p.a.]