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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.

Number of years for which depreciation has been charged on this basis is

  • a)
    2

  • b)
    3

  • c)
    4

  • d)
    5

Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
B Limited has been charging depreciation on the straight line method. ...
Calculation of Depreciation:
- Depreciation charged on straight line method = (Cost of equipment - Residual value) / Number of years
- Residual value of equipment = Rs. 2,97,500
- Depreciation charged on straight line method = (Rs. 3,50,000 - Rs. 2,97,500) / Number of years
- Depreciation charged on straight line method = Rs. 52,500 / Number of years

Calculation of Number of Years:
- Let the number of years for which depreciation has been charged on straight line method be 'n'
- Depreciation charged on straight line method for 'n' years = Rs. 52,500 * n
- Book value of equipment after 'n' years of straight line depreciation = Rs. 3,50,000 - Rs. 52,500 * n
- As per the problem, the book value of equipment after straight line depreciation is Rs. 2,97,500
- Rs. 3,50,000 - Rs. 52,500 * n = Rs. 2,97,500
- Rs. 52,500 * n = Rs. 52,500
- n = 1

Therefore, the number of years for which depreciation has been charged on straight line method is 1 year. However, the problem states that depreciation for the current year has already been charged on straight line method. Hence, the total number of years for which depreciation has been charged on straight line method is 2 years (including the current year). Therefore, the correct answer is option (B) 2.
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Community Answer
B Limited has been charging depreciation on the straight line method. ...
Therefore, the number of years for which depreciation has been charged on this basis is: 3.
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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.Number of years for which depreciation has been charged on this basis isa)2b)3c)4d)5Correct answer is option 'B'. 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.Number of years for which depreciation has been charged on this basis isa)2b)3c)4d)5Correct answer is option 'B'. 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.Number of years for which depreciation has been charged on this basis isa)2b)3c)4d)5Correct answer is option 'B'. 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.Number of years for which depreciation has been charged on this basis isa)2b)3c)4d)5Correct answer is option 'B'. 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.Number of years for which depreciation has been charged on this basis isa)2b)3c)4d)5Correct answer is option 'B'. 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.
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