CA Foundation Exam > CA Foundation Questions > B Ltd. has been charging depreciation on the ...
Start Learning for Free
B Ltd. 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 depreciated value of Rs. 2,97,500.
Number of years for which depreciation has been charged on this basis is
Number of years for which depreciation has been charged on this basis is
- a)2 years
- b)3 years
- c)4 years
- d)5 years
Correct answer is option 'B'. Can you explain this answer?
| FREE This question is part of | Download PDF Attempt this Test |
Most Upvoted Answer
B Ltd. has been charging depreciation on the straight line method. It ...
Given information:
- Machinery purchased for Rs. 3,50,000
- Depreciated at 5% on a straight line basis
- Current value of machinery is Rs. 2,97,500
- Company decides to change depreciation method to reducing balance with retrospective effect
- Applicable reducing balance rate is 8% p.a.
- Depreciation for the current year already charged based on straight line method
- Number of years for which depreciation has been charged on this basis
Solution:
1. Calculation of depreciation charged on straight line method:
Depreciation charged on straight line method = (Cost of machinery - Current value of machinery) / Number of years
Number of years = (Cost of machinery - Current value of machinery) / Depreciation charged on straight line method
= (3,50,000 - 2,97,500) / (3,50,000 x 0.05)
= 3 years
2. Calculation of written down value of machinery:
Written down value = Current value of machinery + Depreciation charged on reducing balance method
Depreciation charged on reducing balance method = Written down value x Rate of depreciation
= 2,97,500 x 0.08
= Rs. 23,800
3. Calculation of retrospective adjustment:
Retrospective adjustment = Depreciation charged on reducing balance method - Depreciation charged on straight line method
= 23,800 - ((3,50,000 - 2,97,500) / 3)
= Rs. 4,100
4. Calculation of revised value of machinery:
Revised value of machinery = Current value of machinery + Retrospective adjustment
= 2,97,500 + 4,100
= Rs. 3,01,600
5. Calculation of number of years for which depreciation has been charged on straight line method:
Number of years = (Cost of machinery - Revised value of machinery) / Depreciation charged on straight line method
= (3,50,000 - 3,01,600) / (3,50,000 x 0.05)
= 2 years
Therefore, the correct answer is option B - 3 years.
- Machinery purchased for Rs. 3,50,000
- Depreciated at 5% on a straight line basis
- Current value of machinery is Rs. 2,97,500
- Company decides to change depreciation method to reducing balance with retrospective effect
- Applicable reducing balance rate is 8% p.a.
- Depreciation for the current year already charged based on straight line method
- Number of years for which depreciation has been charged on this basis
Solution:
1. Calculation of depreciation charged on straight line method:
Depreciation charged on straight line method = (Cost of machinery - Current value of machinery) / Number of years
Number of years = (Cost of machinery - Current value of machinery) / Depreciation charged on straight line method
= (3,50,000 - 2,97,500) / (3,50,000 x 0.05)
= 3 years
2. Calculation of written down value of machinery:
Written down value = Current value of machinery + Depreciation charged on reducing balance method
Depreciation charged on reducing balance method = Written down value x Rate of depreciation
= 2,97,500 x 0.08
= Rs. 23,800
3. Calculation of retrospective adjustment:
Retrospective adjustment = Depreciation charged on reducing balance method - Depreciation charged on straight line method
= 23,800 - ((3,50,000 - 2,97,500) / 3)
= Rs. 4,100
4. Calculation of revised value of machinery:
Revised value of machinery = Current value of machinery + Retrospective adjustment
= 2,97,500 + 4,100
= Rs. 3,01,600
5. Calculation of number of years for which depreciation has been charged on straight line method:
Number of years = (Cost of machinery - Revised value of machinery) / Depreciation charged on straight line method
= (3,50,000 - 3,01,600) / (3,50,000 x 0.05)
= 2 years
Therefore, the correct answer is option B - 3 years.
Free Test
FREE
| Start Free Test |
Community Answer
B Ltd. has been charging depreciation on the straight line method. It ...
Answer is B because to get the depreciable amount 297500 depreciation is charged at 5% p.a.on straight line method I.e.17500 for 3 years
Attention CA Foundation Students!
To make sure you are not studying endlessly, EduRev has designed CA Foundation study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in CA Foundation.
|
Explore Courses for CA Foundation exam
|
|
Top Courses for CA FoundationView all
B Ltd. 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 depreciated value of Rs. 2,97,500.Number of years for which depreciation has been charged on this basis isa)2 yearsb)3 yearsc)4 yearsd)5 yearsCorrect answer is option 'B'. Can you explain this answer?
Question Description
B Ltd. 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 depreciated value of Rs. 2,97,500.Number of years for which depreciation has been charged on this basis isa)2 yearsb)3 yearsc)4 yearsd)5 yearsCorrect 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 Ltd. 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 depreciated value of Rs. 2,97,500.Number of years for which depreciation has been charged on this basis isa)2 yearsb)3 yearsc)4 yearsd)5 yearsCorrect 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 Ltd. 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 depreciated value of Rs. 2,97,500.Number of years for which depreciation has been charged on this basis isa)2 yearsb)3 yearsc)4 yearsd)5 yearsCorrect answer is option 'B'. Can you explain this answer?.
B Ltd. 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 depreciated value of Rs. 2,97,500.Number of years for which depreciation has been charged on this basis isa)2 yearsb)3 yearsc)4 yearsd)5 yearsCorrect 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 Ltd. 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 depreciated value of Rs. 2,97,500.Number of years for which depreciation has been charged on this basis isa)2 yearsb)3 yearsc)4 yearsd)5 yearsCorrect 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 Ltd. 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 depreciated value of Rs. 2,97,500.Number of years for which depreciation has been charged on this basis isa)2 yearsb)3 yearsc)4 yearsd)5 yearsCorrect answer is option 'B'. Can you explain this answer?.
Solutions for B Ltd. 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 depreciated value of Rs. 2,97,500.Number of years for which depreciation has been charged on this basis isa)2 yearsb)3 yearsc)4 yearsd)5 yearsCorrect 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.
Here you can find the meaning of B Ltd. 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 depreciated value of Rs. 2,97,500.Number of years for which depreciation has been charged on this basis isa)2 yearsb)3 yearsc)4 yearsd)5 yearsCorrect answer is option 'B'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
B Ltd. 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 depreciated value of Rs. 2,97,500.Number of years for which depreciation has been charged on this basis isa)2 yearsb)3 yearsc)4 yearsd)5 yearsCorrect answer is option 'B'. Can you explain this answer?, a detailed solution for B Ltd. 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 depreciated value of Rs. 2,97,500.Number of years for which depreciation has been charged on this basis isa)2 yearsb)3 yearsc)4 yearsd)5 yearsCorrect answer is option 'B'. Can you explain this answer? has been provided alongside types of B Ltd. 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 depreciated value of Rs. 2,97,500.Number of years for which depreciation has been charged on this basis isa)2 yearsb)3 yearsc)4 yearsd)5 yearsCorrect answer is option 'B'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice B Ltd. 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 depreciated value of Rs. 2,97,500.Number of years for which depreciation has been charged on this basis isa)2 yearsb)3 yearsc)4 yearsd)5 yearsCorrect answer is option 'B'. Can you explain this answer? tests, examples and also practice CA Foundation tests.
|
|
Explore Courses for CA Foundation exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
Follow Us
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup