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B Limited has been charging depreciation on the straight line method. It charges a full year depreciation even if the machinery is utilized only for part of the year. An equipment which was purchased for Rs.3,50,000 now stands at Rs.2,97,500 after depreciating at the rate of 5% on a straight line basis. Now the company decides to change the method of depreciation with retrospective effect. The applicable reducing balance rate for this machinery would be 8% p.a. Assuming that before the effect of this change could be accounted, depreciation for the current year is already charged based on straight line method and is reflected in the depreciated value of Rs.2,97,500.
If 8% depreciation was charged by the reducing balance method, WDV at the end of 3rd year is
- a)Rs. 2,72,541
- b)Rs. 2,96,240
- c)Rs. 3,22,000
- d)Rs. 3,60,000
Correct answer is option 'A'. Can you explain this answer?
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Most Upvoted Answer
B Limited has been charging depreciation on the straight line method. ...
Calculation of WDV
Given data:
Purchase cost of machinery = Rs. 3,50,000
Depreciation rate under straight line method = 5%
Depreciated value of machinery as on date = Rs. 2,97,500
New depreciation rate under reducing balance method = 8%
Calculation:
1. Calculation of depreciation charged under straight line method
Depreciation charged per annum = (Purchase cost - Scrap value) / Useful life
= (3,50,000 - 0) / 20
= Rs. 17,500 per annum
Depreciation charged till date = Depreciation charged per annum * Number of years
= 17,500 * 3
= Rs. 52,500
2. Calculation of WDV as on date under straight line method
WDV = Purchase cost - Depreciation charged till date
= 3,50,000 - 52,500
= Rs. 2,97,500
3. Calculation of depreciation charged under reducing balance method
Depreciation charged per annum = WDV * Depreciation rate
= 2,97,500 * 8%
= Rs. 23,800 per annum
4. Calculation of WDV at the end of 3rd year under reducing balance method
WDV = Purchase cost * (1 - Depreciation rate)^n
where n = Number of years
WDV = 3,50,000 * (1 - 8%)^3
= Rs. 2,72,541 (rounded off to nearest rupee)
Therefore, the correct answer is option 'A' - Rs. 2,72,541.
Given data:
Purchase cost of machinery = Rs. 3,50,000
Depreciation rate under straight line method = 5%
Depreciated value of machinery as on date = Rs. 2,97,500
New depreciation rate under reducing balance method = 8%
Calculation:
1. Calculation of depreciation charged under straight line method
Depreciation charged per annum = (Purchase cost - Scrap value) / Useful life
= (3,50,000 - 0) / 20
= Rs. 17,500 per annum
Depreciation charged till date = Depreciation charged per annum * Number of years
= 17,500 * 3
= Rs. 52,500
2. Calculation of WDV as on date under straight line method
WDV = Purchase cost - Depreciation charged till date
= 3,50,000 - 52,500
= Rs. 2,97,500
3. Calculation of depreciation charged under reducing balance method
Depreciation charged per annum = WDV * Depreciation rate
= 2,97,500 * 8%
= Rs. 23,800 per annum
4. Calculation of WDV at the end of 3rd year under reducing balance method
WDV = Purchase cost * (1 - Depreciation rate)^n
where n = Number of years
WDV = 3,50,000 * (1 - 8%)^3
= Rs. 2,72,541 (rounded off to nearest rupee)
Therefore, the correct answer is option 'A' - Rs. 2,72,541.
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Community Answer
B Limited has been charging depreciation on the straight line method. ...
Given:
- Original cost of the equipment: ₹3,50,000
- Depreciation rate (Reducing Balance Method): 8% per annum
- Current depreciated value under Straight Line Method: ₹2,97,500 (after the current year's depreciation under the straight-line method).
We will calculate what the WDV would have been if the depreciation had been charged using the Reducing Balance Method (RBM) for all three years.
Step 1: Calculate depreciation for the first year using RBM
Depreciation for the first year is calculated based on the original cost of ₹3,50,000 at an 8% rate:
Depreciation (1st year) = ₹3,50,000 × 8% = ₹28,000
The WDV at the end of the first year is:
WDV (end of 1st year) = ₹3,50,000 − ₹28,000 = ₹3,22,000
Step 2: Calculate depreciation for the second year using RBM
Depreciation for the second year is calculated based on the WDV at the end of the first year (₹3,22,000):
Depreciation (2nd year) = ₹3,22,000 × 8% = ₹25,760
The WDV at the end of the second year is:
WDV (end of 2nd year) = ₹3,22,000 − ₹25,760 = ₹2,96,240
Step 3: Calculate depreciation for the third year using RBM
Depreciation for the third year is based on the WDV at the end of the second year (₹2,96,240):
Depreciation (3rd year) = ₹2,96,240 × 8% = ₹23,699.20
The WDV at the end of the third year is:
WDV (end of 3rd year) = ₹2,96,240 − ₹23,699.20 = ₹2,72,540.80
The WDV at the end of the 3rd year is approximately ₹2,72,541, so the correct answer is: A: ₹2,72,541.
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B Limited has been charging depreciation on the straight line method. It charges a full year depreciation even if the machinery is utilized only for part of the year. An equipment which was purchased for Rs.3,50,000 now stands at Rs.2,97,500 after depreciating at the rate of 5% on a straight line basis. Now the company decides to change the method of depreciation with retrospective effect. The applicable reducing balance rate for this machinery would be 8% p.a. Assuming that before the effect of this change could be accounted, depreciation for the current year is already charged based on straight line method and is reflected in the depreciated value of Rs.2,97,500.If 8% depreciation was charged by the reducing balance method, WDV at the end of 3rd year isa)Rs. 2,72,541b)Rs. 2,96,240c)Rs. 3,22,000d)Rs. 3,60,000Correct answer is option 'A'. Can you explain this answer?
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B Limited has been charging depreciation on the straight line method. It charges a full year depreciation even if the machinery is utilized only for part of the year. An equipment which was purchased for Rs.3,50,000 now stands at Rs.2,97,500 after depreciating at the rate of 5% on a straight line basis. Now the company decides to change the method of depreciation with retrospective effect. The applicable reducing balance rate for this machinery would be 8% p.a. Assuming that before the effect of this change could be accounted, depreciation for the current year is already charged based on straight line method and is reflected in the depreciated value of Rs.2,97,500.If 8% depreciation was charged by the reducing balance method, WDV at the end of 3rd year isa)Rs. 2,72,541b)Rs. 2,96,240c)Rs. 3,22,000d)Rs. 3,60,000Correct answer is option 'A'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about B Limited has been charging depreciation on the straight line method. It charges a full year depreciation even if the machinery is utilized only for part of the year. An equipment which was purchased for Rs.3,50,000 now stands at Rs.2,97,500 after depreciating at the rate of 5% on a straight line basis. Now the company decides to change the method of depreciation with retrospective effect. The applicable reducing balance rate for this machinery would be 8% p.a. Assuming that before the effect of this change could be accounted, depreciation for the current year is already charged based on straight line method and is reflected in the depreciated value of Rs.2,97,500.If 8% depreciation was charged by the reducing balance method, WDV at the end of 3rd year isa)Rs. 2,72,541b)Rs. 2,96,240c)Rs. 3,22,000d)Rs. 3,60,000Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for B Limited has been charging depreciation on the straight line method. It charges a full year depreciation even if the machinery is utilized only for part of the year. An equipment which was purchased for Rs.3,50,000 now stands at Rs.2,97,500 after depreciating at the rate of 5% on a straight line basis. Now the company decides to change the method of depreciation with retrospective effect. The applicable reducing balance rate for this machinery would be 8% p.a. Assuming that before the effect of this change could be accounted, depreciation for the current year is already charged based on straight line method and is reflected in the depreciated value of Rs.2,97,500.If 8% depreciation was charged by the reducing balance method, WDV at the end of 3rd year isa)Rs. 2,72,541b)Rs. 2,96,240c)Rs. 3,22,000d)Rs. 3,60,000Correct answer is option 'A'. Can you explain this answer?.
B Limited has been charging depreciation on the straight line method. It charges a full year depreciation even if the machinery is utilized only for part of the year. An equipment which was purchased for Rs.3,50,000 now stands at Rs.2,97,500 after depreciating at the rate of 5% on a straight line basis. Now the company decides to change the method of depreciation with retrospective effect. The applicable reducing balance rate for this machinery would be 8% p.a. Assuming that before the effect of this change could be accounted, depreciation for the current year is already charged based on straight line method and is reflected in the depreciated value of Rs.2,97,500.If 8% depreciation was charged by the reducing balance method, WDV at the end of 3rd year isa)Rs. 2,72,541b)Rs. 2,96,240c)Rs. 3,22,000d)Rs. 3,60,000Correct answer is option 'A'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about B Limited has been charging depreciation on the straight line method. It charges a full year depreciation even if the machinery is utilized only for part of the year. An equipment which was purchased for Rs.3,50,000 now stands at Rs.2,97,500 after depreciating at the rate of 5% on a straight line basis. Now the company decides to change the method of depreciation with retrospective effect. The applicable reducing balance rate for this machinery would be 8% p.a. Assuming that before the effect of this change could be accounted, depreciation for the current year is already charged based on straight line method and is reflected in the depreciated value of Rs.2,97,500.If 8% depreciation was charged by the reducing balance method, WDV at the end of 3rd year isa)Rs. 2,72,541b)Rs. 2,96,240c)Rs. 3,22,000d)Rs. 3,60,000Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for B Limited has been charging depreciation on the straight line method. It charges a full year depreciation even if the machinery is utilized only for part of the year. An equipment which was purchased for Rs.3,50,000 now stands at Rs.2,97,500 after depreciating at the rate of 5% on a straight line basis. Now the company decides to change the method of depreciation with retrospective effect. The applicable reducing balance rate for this machinery would be 8% p.a. Assuming that before the effect of this change could be accounted, depreciation for the current year is already charged based on straight line method and is reflected in the depreciated value of Rs.2,97,500.If 8% depreciation was charged by the reducing balance method, WDV at the end of 3rd year isa)Rs. 2,72,541b)Rs. 2,96,240c)Rs. 3,22,000d)Rs. 3,60,000Correct answer is option 'A'. Can you explain this answer?.
Solutions for B Limited has been charging depreciation on the straight line method. It charges a full year depreciation even if the machinery is utilized only for part of the year. An equipment which was purchased for Rs.3,50,000 now stands at Rs.2,97,500 after depreciating at the rate of 5% on a straight line basis. Now the company decides to change the method of depreciation with retrospective effect. The applicable reducing balance rate for this machinery would be 8% p.a. Assuming that before the effect of this change could be accounted, depreciation for the current year is already charged based on straight line method and is reflected in the depreciated value of Rs.2,97,500.If 8% depreciation was charged by the reducing balance method, WDV at the end of 3rd year isa)Rs. 2,72,541b)Rs. 2,96,240c)Rs. 3,22,000d)Rs. 3,60,000Correct answer is option 'A'. Can you explain this answer? in English & in Hindi are available as part of our courses for CA Foundation.
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B Limited has been charging depreciation on the straight line method. It charges a full year depreciation even if the machinery is utilized only for part of the year. An equipment which was purchased for Rs.3,50,000 now stands at Rs.2,97,500 after depreciating at the rate of 5% on a straight line basis. Now the company decides to change the method of depreciation with retrospective effect. The applicable reducing balance rate for this machinery would be 8% p.a. Assuming that before the effect of this change could be accounted, depreciation for the current year is already charged based on straight line method and is reflected in the depreciated value of Rs.2,97,500.If 8% depreciation was charged by the reducing balance method, WDV at the end of 3rd year isa)Rs. 2,72,541b)Rs. 2,96,240c)Rs. 3,22,000d)Rs. 3,60,000Correct answer is option 'A'. Can you explain this answer?, a detailed solution for B Limited has been charging depreciation on the straight line method. It charges a full year depreciation even if the machinery is utilized only for part of the year. An equipment which was purchased for Rs.3,50,000 now stands at Rs.2,97,500 after depreciating at the rate of 5% on a straight line basis. Now the company decides to change the method of depreciation with retrospective effect. The applicable reducing balance rate for this machinery would be 8% p.a. Assuming that before the effect of this change could be accounted, depreciation for the current year is already charged based on straight line method and is reflected in the depreciated value of Rs.2,97,500.If 8% depreciation was charged by the reducing balance method, WDV at the end of 3rd year isa)Rs. 2,72,541b)Rs. 2,96,240c)Rs. 3,22,000d)Rs. 3,60,000Correct answer is option 'A'. Can you explain this answer? has been provided alongside types of B Limited has been charging depreciation on the straight line method. It charges a full year depreciation even if the machinery is utilized only for part of the year. An equipment which was purchased for Rs.3,50,000 now stands at Rs.2,97,500 after depreciating at the rate of 5% on a straight line basis. Now the company decides to change the method of depreciation with retrospective effect. The applicable reducing balance rate for this machinery would be 8% p.a. Assuming that before the effect of this change could be accounted, depreciation for the current year is already charged based on straight line method and is reflected in the depreciated value of Rs.2,97,500.If 8% depreciation was charged by the reducing balance method, WDV at the end of 3rd year isa)Rs. 2,72,541b)Rs. 2,96,240c)Rs. 3,22,000d)Rs. 3,60,000Correct answer is option 'A'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice B Limited has been charging depreciation on the straight line method. It charges a full year depreciation even if the machinery is utilized only for part of the year. An equipment which was purchased for Rs.3,50,000 now stands at Rs.2,97,500 after depreciating at the rate of 5% on a straight line basis. Now the company decides to change the method of depreciation with retrospective effect. The applicable reducing balance rate for this machinery would be 8% p.a. Assuming that before the effect of this change could be accounted, depreciation for the current year is already charged based on straight line method and is reflected in the depreciated value of Rs.2,97,500.If 8% depreciation was charged by the reducing balance method, WDV at the end of 3rd year isa)Rs. 2,72,541b)Rs. 2,96,240c)Rs. 3,22,000d)Rs. 3,60,000Correct answer is option 'A'. Can you explain this answer? tests, examples and also practice CA Foundation tests.
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