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An item of furniture was destroyed by fire whose cost was Rs.18,000 against which a claim of Rs.12,000 was accepted by insurance company. The depreciation provision upto date of fire was Rs. 2700. Then the amount of loss is Rs.6000?
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An item of furniture was destroyed by fire whose cost was Rs.18,000 ag...
Understanding the Loss Calculation
To determine the actual loss incurred due to the destruction of the furniture, we need to consider several key factors: the original cost, the insurance claim received, and the accumulated depreciation.
1. Original Cost of Furniture
- The original cost of the furniture was Rs. 18,000.
2. Insurance Claim Accepted
- An insurance claim of Rs. 12,000 was accepted by the insurance company.
3. Depreciation Provision
- The provision for depreciation up to the date of the fire amounted to Rs. 2,700.
4. Calculation of the Loss
To calculate the actual financial loss, we need to account for the net book value of the furniture at the time of the fire:
- Net Book Value = Original Cost - Depreciation
Net Book Value = Rs. 18,000 - Rs. 2,700 = Rs. 15,300
Now, we will compare the net book value with the insurance claim:
- Loss = Net Book Value - Insurance Claim
Loss = Rs. 15,300 - Rs. 12,000 = Rs. 3,300
Conclusion
Thus, the total loss incurred due to the destruction of the furniture is Rs. 3,300, not Rs. 6,000. The Rs. 6,000 figure appears incorrect based on the provided details and calculations.
To determine the actual loss incurred due to the destruction of the furniture, we need to consider several key factors: the original cost, the insurance claim received, and the accumulated depreciation.
1. Original Cost of Furniture
- The original cost of the furniture was Rs. 18,000.
2. Insurance Claim Accepted
- An insurance claim of Rs. 12,000 was accepted by the insurance company.
3. Depreciation Provision
- The provision for depreciation up to the date of the fire amounted to Rs. 2,700.
4. Calculation of the Loss
To calculate the actual financial loss, we need to account for the net book value of the furniture at the time of the fire:
- Net Book Value = Original Cost - Depreciation
Net Book Value = Rs. 18,000 - Rs. 2,700 = Rs. 15,300
Now, we will compare the net book value with the insurance claim:
- Loss = Net Book Value - Insurance Claim
Loss = Rs. 15,300 - Rs. 12,000 = Rs. 3,300
Conclusion
Thus, the total loss incurred due to the destruction of the furniture is Rs. 3,300, not Rs. 6,000. The Rs. 6,000 figure appears incorrect based on the provided details and calculations.
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An item of furniture was destroyed by fire whose cost was Rs.18,000 against which a claim of Rs.12,000 was accepted by insurance company. The depreciation provision upto date of fire was Rs. 2700. Then the amount of loss is Rs.6000?
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An item of furniture was destroyed by fire whose cost was Rs.18,000 against which a claim of Rs.12,000 was accepted by insurance company. The depreciation provision upto date of fire was Rs. 2700. Then the amount of loss is Rs.6000? 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 An item of furniture was destroyed by fire whose cost was Rs.18,000 against which a claim of Rs.12,000 was accepted by insurance company. The depreciation provision upto date of fire was Rs. 2700. Then the amount of loss is Rs.6000? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for An item of furniture was destroyed by fire whose cost was Rs.18,000 against which a claim of Rs.12,000 was accepted by insurance company. The depreciation provision upto date of fire was Rs. 2700. Then the amount of loss is Rs.6000?.
An item of furniture was destroyed by fire whose cost was Rs.18,000 against which a claim of Rs.12,000 was accepted by insurance company. The depreciation provision upto date of fire was Rs. 2700. Then the amount of loss is Rs.6000? 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 An item of furniture was destroyed by fire whose cost was Rs.18,000 against which a claim of Rs.12,000 was accepted by insurance company. The depreciation provision upto date of fire was Rs. 2700. Then the amount of loss is Rs.6000? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for An item of furniture was destroyed by fire whose cost was Rs.18,000 against which a claim of Rs.12,000 was accepted by insurance company. The depreciation provision upto date of fire was Rs. 2700. Then the amount of loss is Rs.6000?.
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