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4. Maddy Ltd. purchased an equipment for Rs. 5,00,000; estimated residual value: 25,000, estimated useful life: 5 yrs; depreciation to be charged under WDV method.
4. Maddy Ltd. purchased an equipment for Rs. 5,00,000; estimated residual value: 25,000, estimated useful life: 5 yrs; depreciation to be charged under WDV method. After using the asset for 3 years Maddy decided to change the depreciation policy and move to straight line method. 1. Prepare journal entry to record depreciation expense for year 4. 2. Compute depreciation expense for year 4 without giving effect to the change in depreciation policy. What is the impact of the change on the profit before tax for year 4? 3. What disclosures should Maddy Ltd. make in its financial statements for year 4
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