Bhaskar Foods Ltd. acquires a machine whose total cost comes to ₹270 lacs. The company received a grant of ₹24 lacs from the central government against the machine. Determine its book value under the two alternatives.
Useful life of the machine is 6 years. Depreciation will be apportioned in equal trenches over 6 years. Determine depreciation under the two alternatives and show how the grant will be treated in the financial statements.
Offer your comments on which alternative is better. Why?
Again: Do this exercise based on WDV method of depreciation after learning it in the next chapter.