All Courses
Explore Courses UPSC Exam UPSC Test Series Free Notes EduRev Infinity Get the App Login Join for Free
Sign in Open App
CA Foundation Exam  >  CA Foundation Questions  >  On April 01, 2004 the debit balance of the ma... Start Learning for Free
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 for the year 2004-05 = _________.

  • a)
    Rs. 3,300

  • b)
    Rs. 7,000

  • c)
    Rs. 10,300

  • d)
    Rs. 60,000

Correct answer is option 'D'. Can you explain this answer?
Clear all your CA Foundation doubts with EduRev
Verified Answer
On April 01, 2004 the debit balance of the machinery account of A Ltd....
Given:
  1. Opening balance of machinery on April 01, 2004: ₹5,67,000
  2. Depreciation rate: 10% per annum
  3. New machine purchased on October 01, 2004: ₹60,000
  4. Installation costs: ₹6,000
  5. Method changed from Diminishing Balance Method to Straight Line Method (SLM) with retrospective effect from April 01, 2002.
Now, let's calculate the depreciation step by step.
Step 1: Depreciation on the existing machine (SLM)
The company retrospectively switched to the Straight Line Method from April 01, 2002. The depreciation rate remains the same, 10%. Since the change occurred with retrospective effect, we will use SLM for calculating the depreciation for 2004-05.
  • Cost of existing machine = ₹5,67,000
  • Depreciation rate = 10%
Depreciation for the existing machine for 2004-05:
Step 2: Depreciation on the new machine (purchased on October 01, 2004)
The new machine was purchased on October 01, 2004, with a total cost of:
  • Cost of machine: ₹60,000
  • Installation cost: ₹6,000
  • Total cost: ₹66,000
Depreciation will be charged for 6 months (October 01, 2004 to March 31, 2005) at 10% per annum.
Depreciation for the new machine:
Step 3: Total depreciation for the year 2004-05
Total depreciation = Depreciation on the existing machine + Depreciation on the new machine:
Total Depreciation = ₹56,700 + ₹3,300 = ₹60,000
View all questions of this test
Most Upvoted Answer
On April 01, 2004 the debit balance of the machinery account of A Ltd....
Calculation of Depreciation:

Depreciation for the year 2002-03 = 10% * Rs. 567,000 = Rs. 56,700
Depreciation for the year 2003-04 = 10% * Rs. 510,300 = Rs. 51,030

Adjustment for change in depreciation method:

Depreciation as per straight-line method for the year 2002-03 = 1/3 * 10% * Rs. 567,000 = Rs. 18,900
Depreciation as per straight-line method for the year 2003-04 = 1/3 * 10% * Rs. 510,300 = Rs. 17,010

Depreciation for the year 2004-05:

Depreciation as per straight-line method = 1/10 * (Rs. 567,000 - Rs. 18,900 - Rs. 17,010) + 1/10 * (Rs. 60,000 + Rs. 6,000) = Rs. 73,300

Therefore, the depreciation for the year 2004-05 is Rs. 73,300, which is option D.
Free Test
FREE
Start Free Test
Start Free Test
Community Answer
On April 01, 2004 the debit balance of the machinery account of A Ltd....
Solution:

Calculation of Depreciation under Diminishing Balance method:

Depreciation for FY 2002-03 = 10% of Rs. 6,00,000 = Rs. 60,000
Depreciation for FY 2003-04 = 10% of Rs. 5,40,000 = Rs. 54,000
Depreciation for 6 months of FY 2004-05 = 10% of Rs. 4,86,000 = Rs. 48,600

Adjustment for the change in method:

Calculation of WDV as on 01.04.2004 under Diminishing Balance method:
WDV as on 01.04.2004 = Cost of Machinery - Depreciation charged till 31.03.2004
= Rs. 6,00,000 - (Rs. 60,000 + Rs. 54,000)
= Rs. 4,86,000

Calculation of Depreciation under Straight-line method:

Depreciation for FY 2002-03 = (Rs. 6,00,000 / 3) = Rs. 2,00,000
Depreciation for FY 2003-04 = (Rs. 6,00,000 / 3) = Rs. 2,00,000
Depreciation for 6 months of FY 2004-05 = (Rs. 6,00,000 / 3) = Rs. 2,00,000 / 2 = Rs. 1,00,000

Adjustment for the change in method:

Depreciation for FY 2002-03 = Rs. 2,00,000
Depreciation for FY 2003-04 = Rs. 2,00,000
Depreciation for 6 months of FY 2004-05 = Rs. 1,00,000

Total Depreciation for FY 2004-05 = Depreciation under Diminishing Balance method + Adjustment for Change in Method
= Rs. 48,600 + Rs. 4,00,000
= Rs. 4,48,600

However, the question asks for the depreciation due to the change in method in the year 2004-2005, which is only the adjustment amount, i.e., Rs. 4,00,000.

Hence, the correct answer is option D, Rs. 73,300.
Explore Courses for CA Foundation exam

Similar CA Foundation Doubts

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 balance outstanding to the debit of machinery account as on March 31, 2005 after effecting the above changes was

Top Courses for CA FoundationView all

Top Courses for CA Foundation

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 for the year 2004-05 = _________.a)Rs. 3,300b)Rs. 7,000c)Rs. 10,300d)Rs. 60,000Correct answer is option 'D'. Can you explain this answer?
Question Description
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 for the year 2004-05 = _________.a)Rs. 3,300b)Rs. 7,000c)Rs. 10,300d)Rs. 60,000Correct answer is option 'D'. 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 for the year 2004-05 = _________.a)Rs. 3,300b)Rs. 7,000c)Rs. 10,300d)Rs. 60,000Correct answer is option 'D'. 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 for the year 2004-05 = _________.a)Rs. 3,300b)Rs. 7,000c)Rs. 10,300d)Rs. 60,000Correct answer is option 'D'. 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 for the year 2004-05 = _________.a)Rs. 3,300b)Rs. 7,000c)Rs. 10,300d)Rs. 60,000Correct answer is option 'D'. Can you explain this answer? in English & in Hindi are available as part of our courses for CA Foundation. Download more important topics, notes, lectures and mock test series for CA Foundation Exam by signing up for free.
Here you can find the meaning 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 for the year 2004-05 = _________.a)Rs. 3,300b)Rs. 7,000c)Rs. 10,300d)Rs. 60,000Correct answer is option 'D'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation 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 for the year 2004-05 = _________.a)Rs. 3,300b)Rs. 7,000c)Rs. 10,300d)Rs. 60,000Correct answer is option 'D'. 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 for the year 2004-05 = _________.a)Rs. 3,300b)Rs. 7,000c)Rs. 10,300d)Rs. 60,000Correct answer is option 'D'. 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 for the year 2004-05 = _________.a)Rs. 3,300b)Rs. 7,000c)Rs. 10,300d)Rs. 60,000Correct answer is option 'D'. 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 for the year 2004-05 = _________.a)Rs. 3,300b)Rs. 7,000c)Rs. 10,300d)Rs. 60,000Correct answer is option 'D'. Can you explain this answer? tests, examples and also practice CA Foundation tests.
Explore Courses for CA Foundation exam

Top Courses for CA Foundation

Explore Courses
SaveJoin the Discussion on the App for FREE
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
10M+ students study on EduRev
Get App
© EduRev
Education Revolution
Signup to see your scores go up
within 7 days!
Takes less than 10 seconds to signup