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On April 01, 2004 the debit balance of the machinery account of A Ltd. was Rs.5,67,000.
The machine was purchased on April 01, 2002. The company charged depreciation at the rate of 10% per annum under diminishing balance method. On October 01, 2004, the company acquired a new machine at a cost of Rs.60,000 and incurred Rs.6,000 for installation of the new machine. The company decided to change the system of providing depreciation from the diminishing balance method to the straight-line method with retrospective effect from April 01, 2002. The rate of depreciation will remain the same.
The company decided to make necessary adjustments in respect of depreciation due to the change in the method in the year 2004-2005.
The machine was purchased on April 01, 2002. The company charged depreciation at the rate of 10% per annum under diminishing balance method. On October 01, 2004, the company acquired a new machine at a cost of Rs.60,000 and incurred Rs.6,000 for installation of the new machine. The company decided to change the system of providing depreciation from the diminishing balance method to the straight-line method with retrospective effect from April 01, 2002. The rate of depreciation will remain the same.
The company decided to make necessary adjustments in respect of depreciation due to the change in the method in the year 2004-2005.
Depreciation provided in 2003-04 = ______.
- a)Rs. 51,030
- b)Rs. 56,700
- c)Rs. 63,000
- d)Rs. 70,000
Correct answer is option 'C'. Can you explain this answer?
Verified Answer
On April 01, 2004 the debit balance of the machinery account of A Ltd....
Given:
- Debit balance on April 01, 2004: ₹5,67,000
- Depreciation rate: 10% per annum (Diminishing Balance Method)
- Machine purchased on April 01, 2002 at an initial cost (not provided directly, but can be worked backward)
- Depreciation method for 2003-04: Diminishing Balance Method
Step 1: Calculate depreciation for 2003-04
- Depreciation for 2003-04 would be 10% of the opening balance (as it's under the diminishing balance method).
- The opening balance on April 01, 2003 (after one year of depreciation) can be estimated as the closing balance on April 01, 2004, which is ₹5,67,000.
Let’s find the amount of depreciation using the diminishing balance method for the year 2003-04.
Step 2: Work backward from the closing balance to find the depreciation
- The closing balance on April 01, 2004 is ₹5,67,000 after two years of diminishing balance depreciation.
- Let’s calculate the opening value of the machinery account on April 01, 2003 before depreciation for 2003-04.
Let the value of the machinery on April 01, 2003 be X.
So, the opening balance on April 01, 2003 was ₹6,30,000.
Step 3: Calculate depreciation for 2003-04
Now, depreciation for 2003-04 is:
Depreciation for 2003-04 = 10% × ₹6,30,000 = ₹63,000
The depreciation provided in 2003-04 is ₹63,000, so the correct answer is Option C: ₹63,000.
Most Upvoted Answer
On April 01, 2004 the debit balance of the machinery account of A Ltd....
Calculation of Depreciation:
The machine was purchased on April 01, 2002. So, the year ended on March 31, 2003, is the first year of depreciation.
Depreciation for the year 2002-03 = 10% of Rs. 5,67,000 = Rs. 56,700
Depreciation for the year 2003-04 = 10% of (Rs. 5,67,000 - Rs. 56,700) = Rs. 51,030
Adjustment for Change in Depreciation Method:
The company changed the method of depreciation from diminishing balance to straight-line with retrospective effect from April 01, 2002. So, the depreciation for the years 2002-03 and 2003-04 needs to be adjusted.
Depreciation for the year 2002-03 under straight-line method = 10% of Rs. 5,67,000 = Rs. 56,700
Depreciation for the year 2003-04 under straight-line method = 10% of Rs. 5,67,000 = Rs. 56,700
So, the adjustment for the year 2002-03 = Rs. (56,700 - 56,700) = Rs. 0
And the adjustment for the year 2003-04 = Rs. (51,030 - 56,700) = Rs. (-5,670) (negative because the amount of depreciation under diminishing balance method is higher than that under straight-line method)
Final Depreciation for the year 2003-04:
Depreciation for the year 2003-04 under straight-line method = Rs. 56,700 - Rs. 5,670 = Rs. 51,030
Hence, the correct answer is option (c) Rs. 63,000.
The machine was purchased on April 01, 2002. So, the year ended on March 31, 2003, is the first year of depreciation.
Depreciation for the year 2002-03 = 10% of Rs. 5,67,000 = Rs. 56,700
Depreciation for the year 2003-04 = 10% of (Rs. 5,67,000 - Rs. 56,700) = Rs. 51,030
Adjustment for Change in Depreciation Method:
The company changed the method of depreciation from diminishing balance to straight-line with retrospective effect from April 01, 2002. So, the depreciation for the years 2002-03 and 2003-04 needs to be adjusted.
Depreciation for the year 2002-03 under straight-line method = 10% of Rs. 5,67,000 = Rs. 56,700
Depreciation for the year 2003-04 under straight-line method = 10% of Rs. 5,67,000 = Rs. 56,700
So, the adjustment for the year 2002-03 = Rs. (56,700 - 56,700) = Rs. 0
And the adjustment for the year 2003-04 = Rs. (51,030 - 56,700) = Rs. (-5,670) (negative because the amount of depreciation under diminishing balance method is higher than that under straight-line method)
Final Depreciation for the year 2003-04:
Depreciation for the year 2003-04 under straight-line method = Rs. 56,700 - Rs. 5,670 = Rs. 51,030
Hence, the correct answer is option (c) Rs. 63,000.
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On April 01, 2004 the debit balance of the machinery account of A Ltd. was Rs.5,67,000.The machine was purchased on April 01, 2002. The company charged depreciation at the rate of 10% per annum under diminishing balance method. On October 01, 2004, the company acquired a new machine at a cost of Rs.60,000 and incurred Rs.6,000 for installation of the new machine. The company decided to change the system of providing depreciation from the diminishing balance method to the straight-line method with retrospective effect from April 01, 2002. The rate of depreciation will remain the same.The company decided to make necessary adjustments in respect of depreciation due to the change in the method in the year 2004-2005.Depreciation provided in 2003-04 = ______.a)Rs. 51,030b)Rs. 56,700c)Rs. 63,000d)Rs. 70,000Correct answer is option 'C'. Can you explain this answer?
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On April 01, 2004 the debit balance of the machinery account of A Ltd. was Rs.5,67,000.The machine was purchased on April 01, 2002. The company charged depreciation at the rate of 10% per annum under diminishing balance method. On October 01, 2004, the company acquired a new machine at a cost of Rs.60,000 and incurred Rs.6,000 for installation of the new machine. The company decided to change the system of providing depreciation from the diminishing balance method to the straight-line method with retrospective effect from April 01, 2002. The rate of depreciation will remain the same.The company decided to make necessary adjustments in respect of depreciation due to the change in the method in the year 2004-2005.Depreciation provided in 2003-04 = ______.a)Rs. 51,030b)Rs. 56,700c)Rs. 63,000d)Rs. 70,000Correct answer is option 'C'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about On April 01, 2004 the debit balance of the machinery account of A Ltd. was Rs.5,67,000.The machine was purchased on April 01, 2002. The company charged depreciation at the rate of 10% per annum under diminishing balance method. On October 01, 2004, the company acquired a new machine at a cost of Rs.60,000 and incurred Rs.6,000 for installation of the new machine. The company decided to change the system of providing depreciation from the diminishing balance method to the straight-line method with retrospective effect from April 01, 2002. The rate of depreciation will remain the same.The company decided to make necessary adjustments in respect of depreciation due to the change in the method in the year 2004-2005.Depreciation provided in 2003-04 = ______.a)Rs. 51,030b)Rs. 56,700c)Rs. 63,000d)Rs. 70,000Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for On April 01, 2004 the debit balance of the machinery account of A Ltd. was Rs.5,67,000.The machine was purchased on April 01, 2002. The company charged depreciation at the rate of 10% per annum under diminishing balance method. On October 01, 2004, the company acquired a new machine at a cost of Rs.60,000 and incurred Rs.6,000 for installation of the new machine. The company decided to change the system of providing depreciation from the diminishing balance method to the straight-line method with retrospective effect from April 01, 2002. The rate of depreciation will remain the same.The company decided to make necessary adjustments in respect of depreciation due to the change in the method in the year 2004-2005.Depreciation provided in 2003-04 = ______.a)Rs. 51,030b)Rs. 56,700c)Rs. 63,000d)Rs. 70,000Correct answer is option 'C'. Can you explain this answer?.
On April 01, 2004 the debit balance of the machinery account of A Ltd. was Rs.5,67,000.The machine was purchased on April 01, 2002. The company charged depreciation at the rate of 10% per annum under diminishing balance method. On October 01, 2004, the company acquired a new machine at a cost of Rs.60,000 and incurred Rs.6,000 for installation of the new machine. The company decided to change the system of providing depreciation from the diminishing balance method to the straight-line method with retrospective effect from April 01, 2002. The rate of depreciation will remain the same.The company decided to make necessary adjustments in respect of depreciation due to the change in the method in the year 2004-2005.Depreciation provided in 2003-04 = ______.a)Rs. 51,030b)Rs. 56,700c)Rs. 63,000d)Rs. 70,000Correct answer is option 'C'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about On April 01, 2004 the debit balance of the machinery account of A Ltd. was Rs.5,67,000.The machine was purchased on April 01, 2002. The company charged depreciation at the rate of 10% per annum under diminishing balance method. On October 01, 2004, the company acquired a new machine at a cost of Rs.60,000 and incurred Rs.6,000 for installation of the new machine. The company decided to change the system of providing depreciation from the diminishing balance method to the straight-line method with retrospective effect from April 01, 2002. The rate of depreciation will remain the same.The company decided to make necessary adjustments in respect of depreciation due to the change in the method in the year 2004-2005.Depreciation provided in 2003-04 = ______.a)Rs. 51,030b)Rs. 56,700c)Rs. 63,000d)Rs. 70,000Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for On April 01, 2004 the debit balance of the machinery account of A Ltd. was Rs.5,67,000.The machine was purchased on April 01, 2002. The company charged depreciation at the rate of 10% per annum under diminishing balance method. On October 01, 2004, the company acquired a new machine at a cost of Rs.60,000 and incurred Rs.6,000 for installation of the new machine. The company decided to change the system of providing depreciation from the diminishing balance method to the straight-line method with retrospective effect from April 01, 2002. The rate of depreciation will remain the same.The company decided to make necessary adjustments in respect of depreciation due to the change in the method in the year 2004-2005.Depreciation provided in 2003-04 = ______.a)Rs. 51,030b)Rs. 56,700c)Rs. 63,000d)Rs. 70,000Correct answer is option 'C'. Can you explain this answer?.
Solutions for On April 01, 2004 the debit balance of the machinery account of A Ltd. was Rs.5,67,000.The machine was purchased on April 01, 2002. The company charged depreciation at the rate of 10% per annum under diminishing balance method. On October 01, 2004, the company acquired a new machine at a cost of Rs.60,000 and incurred Rs.6,000 for installation of the new machine. The company decided to change the system of providing depreciation from the diminishing balance method to the straight-line method with retrospective effect from April 01, 2002. The rate of depreciation will remain the same.The company decided to make necessary adjustments in respect of depreciation due to the change in the method in the year 2004-2005.Depreciation provided in 2003-04 = ______.a)Rs. 51,030b)Rs. 56,700c)Rs. 63,000d)Rs. 70,000Correct answer is option 'C'. Can you explain this answer? in English & in Hindi are available as part of our courses for CA Foundation.
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On April 01, 2004 the debit balance of the machinery account of A Ltd. was Rs.5,67,000.The machine was purchased on April 01, 2002. The company charged depreciation at the rate of 10% per annum under diminishing balance method. On October 01, 2004, the company acquired a new machine at a cost of Rs.60,000 and incurred Rs.6,000 for installation of the new machine. The company decided to change the system of providing depreciation from the diminishing balance method to the straight-line method with retrospective effect from April 01, 2002. The rate of depreciation will remain the same.The company decided to make necessary adjustments in respect of depreciation due to the change in the method in the year 2004-2005.Depreciation provided in 2003-04 = ______.a)Rs. 51,030b)Rs. 56,700c)Rs. 63,000d)Rs. 70,000Correct answer is option 'C'. Can you explain this answer?, a detailed solution for On April 01, 2004 the debit balance of the machinery account of A Ltd. was Rs.5,67,000.The machine was purchased on April 01, 2002. The company charged depreciation at the rate of 10% per annum under diminishing balance method. On October 01, 2004, the company acquired a new machine at a cost of Rs.60,000 and incurred Rs.6,000 for installation of the new machine. The company decided to change the system of providing depreciation from the diminishing balance method to the straight-line method with retrospective effect from April 01, 2002. The rate of depreciation will remain the same.The company decided to make necessary adjustments in respect of depreciation due to the change in the method in the year 2004-2005.Depreciation provided in 2003-04 = ______.a)Rs. 51,030b)Rs. 56,700c)Rs. 63,000d)Rs. 70,000Correct answer is option 'C'. Can you explain this answer? has been provided alongside types of On April 01, 2004 the debit balance of the machinery account of A Ltd. was Rs.5,67,000.The machine was purchased on April 01, 2002. The company charged depreciation at the rate of 10% per annum under diminishing balance method. On October 01, 2004, the company acquired a new machine at a cost of Rs.60,000 and incurred Rs.6,000 for installation of the new machine. The company decided to change the system of providing depreciation from the diminishing balance method to the straight-line method with retrospective effect from April 01, 2002. The rate of depreciation will remain the same.The company decided to make necessary adjustments in respect of depreciation due to the change in the method in the year 2004-2005.Depreciation provided in 2003-04 = ______.a)Rs. 51,030b)Rs. 56,700c)Rs. 63,000d)Rs. 70,000Correct answer is option 'C'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice On April 01, 2004 the debit balance of the machinery account of A Ltd. was Rs.5,67,000.The machine was purchased on April 01, 2002. The company charged depreciation at the rate of 10% per annum under diminishing balance method. On October 01, 2004, the company acquired a new machine at a cost of Rs.60,000 and incurred Rs.6,000 for installation of the new machine. The company decided to change the system of providing depreciation from the diminishing balance method to the straight-line method with retrospective effect from April 01, 2002. The rate of depreciation will remain the same.The company decided to make necessary adjustments in respect of depreciation due to the change in the method in the year 2004-2005.Depreciation provided in 2003-04 = ______.a)Rs. 51,030b)Rs. 56,700c)Rs. 63,000d)Rs. 70,000Correct answer is option 'C'. Can you explain this answer? tests, examples and also practice CA Foundation tests.
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