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H Ltd. purchased a machinery on April 01, 2000 for Rs.3,00,000. It is estimated that the machinery will have a useful life of 5 years after which it will have no salvage value. If the company follows sum-of-the-years’-digits method of depreciation, the amount of depreciation charged during the year 2004-05 was
  • a)
    Rs.1,00,000
  • b)
    Rs.80,000
  • c)
    Rs.60,000
  • d)
    Rs.20,000.
Correct answer is option 'D'. Can you explain this answer?
Most Upvoted Answer
H Ltd. purchased a machinery on April 01, 2000 for Rs.3,00,000. It is ...

Given information:
- Purchase date of the machinery: April 01, 2000
- Cost of the machinery: Rs.3,00,000
- Useful life of the machinery: 5 years
- Salvage value: None
To calculate the amount of depreciation charged during the year 2004-05 using the sum-of-the-years'-digits method, we need to follow these steps:
1. Calculate the total number of years of useful life of the machinery: 5 years
2. Calculate the sum of the digits for the total number of years:
- Sum of the digits = n * (n + 1) / 2, where n is the total number of years
- Sum of the digits = 5 * (5 + 1) / 2 = 5 * 6 / 2 = 15
3. Calculate the fraction for the year 2004-05:
- Year 2004-05 is the 5th year of the machinery's useful life
- Fraction for the year 2004-05 = Remaining useful life of the machinery / Sum of the digits
- Fraction for the year 2004-05 = (5 - 5 + 1) / 15 = 1/15
4. Calculate the depreciation charged for the year 2004-05:
- Depreciation charged for the year 2004-05 = Cost of the machinery * Fraction for the year 2004-05
- Depreciation charged for the year 2004-05 = Rs.3,00,000 * 1/15
- Depreciation charged for the year 2004-05 = Rs.20,000
Therefore, the amount of depreciation charged during the year 2004-05 using the sum-of-the-years'-digits method is Rs.20,000. The correct answer is option D.
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H Ltd. purchased a machinery on April 01, 2000 for Rs.3,00,000. It is ...
D
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H Ltd. purchased a machinery on April 01, 2000 for Rs.3,00,000. It is estimated that the machinery will have a useful life of 5 years after which it will have no salvage value. If the company follows sum-of-the-years’-digits method of depreciation, the amount of depreciation charged during the year 2004-05 wasa)Rs.1,00,000b)Rs.80,000c)Rs.60,000d)Rs.20,000.Correct answer is option 'D'. Can you explain this answer?
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H Ltd. purchased a machinery on April 01, 2000 for Rs.3,00,000. It is estimated that the machinery will have a useful life of 5 years after which it will have no salvage value. If the company follows sum-of-the-years’-digits method of depreciation, the amount of depreciation charged during the year 2004-05 wasa)Rs.1,00,000b)Rs.80,000c)Rs.60,000d)Rs.20,000.Correct answer is option 'D'. 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 H Ltd. purchased a machinery on April 01, 2000 for Rs.3,00,000. It is estimated that the machinery will have a useful life of 5 years after which it will have no salvage value. If the company follows sum-of-the-years’-digits method of depreciation, the amount of depreciation charged during the year 2004-05 wasa)Rs.1,00,000b)Rs.80,000c)Rs.60,000d)Rs.20,000.Correct answer is option 'D'. 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 H Ltd. purchased a machinery on April 01, 2000 for Rs.3,00,000. It is estimated that the machinery will have a useful life of 5 years after which it will have no salvage value. If the company follows sum-of-the-years’-digits method of depreciation, the amount of depreciation charged during the year 2004-05 wasa)Rs.1,00,000b)Rs.80,000c)Rs.60,000d)Rs.20,000.Correct answer is option 'D'. Can you explain this answer?.
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