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On August 01,2002, K Travels Ltd. bought four Matador vans costing Rs.1,20,000 each.The company expected to fetch a scrap value of 25% of the cost price of the vehicles after ten years. The vehicles were depreciated under the fixed installment method up to March 31, 2005. With effect from April 01, 2005, the company decided to introduce the diminishing balance method of depreciation @ 20% p.a. instead of the fixed installment method. The company sold one of the vans at Rs.70,000 on March 31, 2005. The rate of depreciation charged up to March 31, 2005 was
- a)10.0%
- b)9.0%
- c)8.5%
- d)7.5%
Correct answer is option 'D'. Can you explain this answer?
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On August 01,2002, K Travels Ltd. bought four Matador vans costing Rs....
Depreciation Calculation for Matador Vans
Fixed Installment Method (up to March 31, 2005)
- Cost of each Matador van = Rs.1,20,000
- Total cost of four Matador vans = Rs.4,80,000
- Scrap value after ten years = 25% of cost price = 25/100 x Rs.1,20,000 = Rs.30,000
- Depreciable amount = Cost of asset - Scrap value = Rs.1,20,000 - Rs.30,000 = Rs.90,000
- Total depreciation for ten years = Depreciable amount/Number of years = Rs.90,000/10 = Rs.9,000 per year
- Annual depreciation rate = Depreciation per year/Cost of asset x 100 = Rs.9,000/Rs.1,20,000 x 100 = 7.5%
Diminishing Balance Method (from April 01, 2005)
- Annual depreciation rate = 20%
- Depreciation for the year ended March 31, 2006 = 20% x (Rs.1,20,000 - Rs.70,000) = Rs.10,000
- Written down value as on April 01, 2006 = Rs.1,20,000 - Rs.10,000 = Rs.1,10,000
- Depreciation for the year ended March 31, 2007 = 20% x Rs.1,10,000 = Rs.22,000
- Written down value as on April 01, 2007 = Rs.1,10,000 - Rs.22,000 = Rs.88,000
- Similarly, depreciation can be calculated for subsequent years.
Sale of Van on March 31, 2005
- One of the Matador vans was sold on March 31, 2005 for Rs.70,000.
- The van was in use for only 2 years (from August 01, 2002 to March 31, 2005).
- Depreciation charged up to March 31, 2005 = 2 x Rs.9,000 = Rs.18,000
- Written down value as on March 31, 2005 = Rs.1,20,000 - Rs.18,000 = Rs.1,02,000
- Sale proceeds = Rs.70,000
- Loss on sale = Written down value - Sale proceeds = Rs.1,02,000 - Rs.70,000 = Rs.32,000
Conclusion
- The rate of depreciation charged up to March 31, 2005 was 7.5%.
- The company introduced the diminishing balance method of depreciation @ 20% p.a. from April 01, 2005.
- One of the Matador vans was sold on March 31, 2005 at a loss of Rs.32,000.
Fixed Installment Method (up to March 31, 2005)
- Cost of each Matador van = Rs.1,20,000
- Total cost of four Matador vans = Rs.4,80,000
- Scrap value after ten years = 25% of cost price = 25/100 x Rs.1,20,000 = Rs.30,000
- Depreciable amount = Cost of asset - Scrap value = Rs.1,20,000 - Rs.30,000 = Rs.90,000
- Total depreciation for ten years = Depreciable amount/Number of years = Rs.90,000/10 = Rs.9,000 per year
- Annual depreciation rate = Depreciation per year/Cost of asset x 100 = Rs.9,000/Rs.1,20,000 x 100 = 7.5%
Diminishing Balance Method (from April 01, 2005)
- Annual depreciation rate = 20%
- Depreciation for the year ended March 31, 2006 = 20% x (Rs.1,20,000 - Rs.70,000) = Rs.10,000
- Written down value as on April 01, 2006 = Rs.1,20,000 - Rs.10,000 = Rs.1,10,000
- Depreciation for the year ended March 31, 2007 = 20% x Rs.1,10,000 = Rs.22,000
- Written down value as on April 01, 2007 = Rs.1,10,000 - Rs.22,000 = Rs.88,000
- Similarly, depreciation can be calculated for subsequent years.
Sale of Van on March 31, 2005
- One of the Matador vans was sold on March 31, 2005 for Rs.70,000.
- The van was in use for only 2 years (from August 01, 2002 to March 31, 2005).
- Depreciation charged up to March 31, 2005 = 2 x Rs.9,000 = Rs.18,000
- Written down value as on March 31, 2005 = Rs.1,20,000 - Rs.18,000 = Rs.1,02,000
- Sale proceeds = Rs.70,000
- Loss on sale = Written down value - Sale proceeds = Rs.1,02,000 - Rs.70,000 = Rs.32,000
Conclusion
- The rate of depreciation charged up to March 31, 2005 was 7.5%.
- The company introduced the diminishing balance method of depreciation @ 20% p.a. from April 01, 2005.
- One of the Matador vans was sold on March 31, 2005 at a loss of Rs.32,000.
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On August 01,2002, K Travels Ltd. bought four Matador vans costing Rs.1,20,000 each.The company expected to fetch a scrap value of 25% of the cost price of the vehicles after ten years. The vehicles were depreciated under the fixed installment method up to March 31, 2005. With effect from April 01, 2005, the company decided to introduce the diminishing balance method of depreciation @ 20% p.a. instead of the fixed installment method. The company sold one of the vans at Rs.70,000 on March 31, 2005. The rate of depreciation charged up to March 31, 2005 wasa)10.0%b)9.0%c)8.5%d)7.5%Correct answer is option 'D'. Can you explain this answer?
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On August 01,2002, K Travels Ltd. bought four Matador vans costing Rs.1,20,000 each.The company expected to fetch a scrap value of 25% of the cost price of the vehicles after ten years. The vehicles were depreciated under the fixed installment method up to March 31, 2005. With effect from April 01, 2005, the company decided to introduce the diminishing balance method of depreciation @ 20% p.a. instead of the fixed installment method. The company sold one of the vans at Rs.70,000 on March 31, 2005. The rate of depreciation charged up to March 31, 2005 wasa)10.0%b)9.0%c)8.5%d)7.5%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 On August 01,2002, K Travels Ltd. bought four Matador vans costing Rs.1,20,000 each.The company expected to fetch a scrap value of 25% of the cost price of the vehicles after ten years. The vehicles were depreciated under the fixed installment method up to March 31, 2005. With effect from April 01, 2005, the company decided to introduce the diminishing balance method of depreciation @ 20% p.a. instead of the fixed installment method. The company sold one of the vans at Rs.70,000 on March 31, 2005. The rate of depreciation charged up to March 31, 2005 wasa)10.0%b)9.0%c)8.5%d)7.5%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 On August 01,2002, K Travels Ltd. bought four Matador vans costing Rs.1,20,000 each.The company expected to fetch a scrap value of 25% of the cost price of the vehicles after ten years. The vehicles were depreciated under the fixed installment method up to March 31, 2005. With effect from April 01, 2005, the company decided to introduce the diminishing balance method of depreciation @ 20% p.a. instead of the fixed installment method. The company sold one of the vans at Rs.70,000 on March 31, 2005. The rate of depreciation charged up to March 31, 2005 wasa)10.0%b)9.0%c)8.5%d)7.5%Correct answer is option 'D'. Can you explain this answer?.
On August 01,2002, K Travels Ltd. bought four Matador vans costing Rs.1,20,000 each.The company expected to fetch a scrap value of 25% of the cost price of the vehicles after ten years. The vehicles were depreciated under the fixed installment method up to March 31, 2005. With effect from April 01, 2005, the company decided to introduce the diminishing balance method of depreciation @ 20% p.a. instead of the fixed installment method. The company sold one of the vans at Rs.70,000 on March 31, 2005. The rate of depreciation charged up to March 31, 2005 wasa)10.0%b)9.0%c)8.5%d)7.5%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 On August 01,2002, K Travels Ltd. bought four Matador vans costing Rs.1,20,000 each.The company expected to fetch a scrap value of 25% of the cost price of the vehicles after ten years. The vehicles were depreciated under the fixed installment method up to March 31, 2005. With effect from April 01, 2005, the company decided to introduce the diminishing balance method of depreciation @ 20% p.a. instead of the fixed installment method. The company sold one of the vans at Rs.70,000 on March 31, 2005. The rate of depreciation charged up to March 31, 2005 wasa)10.0%b)9.0%c)8.5%d)7.5%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 On August 01,2002, K Travels Ltd. bought four Matador vans costing Rs.1,20,000 each.The company expected to fetch a scrap value of 25% of the cost price of the vehicles after ten years. The vehicles were depreciated under the fixed installment method up to March 31, 2005. With effect from April 01, 2005, the company decided to introduce the diminishing balance method of depreciation @ 20% p.a. instead of the fixed installment method. The company sold one of the vans at Rs.70,000 on March 31, 2005. The rate of depreciation charged up to March 31, 2005 wasa)10.0%b)9.0%c)8.5%d)7.5%Correct answer is option 'D'. Can you explain this answer?.
Solutions for On August 01,2002, K Travels Ltd. bought four Matador vans costing Rs.1,20,000 each.The company expected to fetch a scrap value of 25% of the cost price of the vehicles after ten years. The vehicles were depreciated under the fixed installment method up to March 31, 2005. With effect from April 01, 2005, the company decided to introduce the diminishing balance method of depreciation @ 20% p.a. instead of the fixed installment method. The company sold one of the vans at Rs.70,000 on March 31, 2005. The rate of depreciation charged up to March 31, 2005 wasa)10.0%b)9.0%c)8.5%d)7.5%Correct answer is option 'D'. Can you explain this answer? in English & in Hindi are available as part of our courses for CA Foundation.
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Here you can find the meaning of On August 01,2002, K Travels Ltd. bought four Matador vans costing Rs.1,20,000 each.The company expected to fetch a scrap value of 25% of the cost price of the vehicles after ten years. The vehicles were depreciated under the fixed installment method up to March 31, 2005. With effect from April 01, 2005, the company decided to introduce the diminishing balance method of depreciation @ 20% p.a. instead of the fixed installment method. The company sold one of the vans at Rs.70,000 on March 31, 2005. The rate of depreciation charged up to March 31, 2005 wasa)10.0%b)9.0%c)8.5%d)7.5%Correct answer is option 'D'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
On August 01,2002, K Travels Ltd. bought four Matador vans costing Rs.1,20,000 each.The company expected to fetch a scrap value of 25% of the cost price of the vehicles after ten years. The vehicles were depreciated under the fixed installment method up to March 31, 2005. With effect from April 01, 2005, the company decided to introduce the diminishing balance method of depreciation @ 20% p.a. instead of the fixed installment method. The company sold one of the vans at Rs.70,000 on March 31, 2005. The rate of depreciation charged up to March 31, 2005 wasa)10.0%b)9.0%c)8.5%d)7.5%Correct answer is option 'D'. Can you explain this answer?, a detailed solution for On August 01,2002, K Travels Ltd. bought four Matador vans costing Rs.1,20,000 each.The company expected to fetch a scrap value of 25% of the cost price of the vehicles after ten years. The vehicles were depreciated under the fixed installment method up to March 31, 2005. With effect from April 01, 2005, the company decided to introduce the diminishing balance method of depreciation @ 20% p.a. instead of the fixed installment method. The company sold one of the vans at Rs.70,000 on March 31, 2005. The rate of depreciation charged up to March 31, 2005 wasa)10.0%b)9.0%c)8.5%d)7.5%Correct answer is option 'D'. Can you explain this answer? has been provided alongside types of On August 01,2002, K Travels Ltd. bought four Matador vans costing Rs.1,20,000 each.The company expected to fetch a scrap value of 25% of the cost price of the vehicles after ten years. The vehicles were depreciated under the fixed installment method up to March 31, 2005. With effect from April 01, 2005, the company decided to introduce the diminishing balance method of depreciation @ 20% p.a. instead of the fixed installment method. The company sold one of the vans at Rs.70,000 on March 31, 2005. The rate of depreciation charged up to March 31, 2005 wasa)10.0%b)9.0%c)8.5%d)7.5%Correct answer is option 'D'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice On August 01,2002, K Travels Ltd. bought four Matador vans costing Rs.1,20,000 each.The company expected to fetch a scrap value of 25% of the cost price of the vehicles after ten years. The vehicles were depreciated under the fixed installment method up to March 31, 2005. With effect from April 01, 2005, the company decided to introduce the diminishing balance method of depreciation @ 20% p.a. instead of the fixed installment method. The company sold one of the vans at Rs.70,000 on March 31, 2005. The rate of depreciation charged up to March 31, 2005 wasa)10.0%b)9.0%c)8.5%d)7.5%Correct answer is option 'D'. Can you explain this answer? tests, examples and also practice CA Foundation tests.
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