Phone first January 2019 Kohinoor Transport Company purchased a bus fo...
- Depreciation Calculation:
Given:
- Cost of the bus purchased on 1st July 2020 = Rs. 10,00,000
- Depreciation rate = 20%
- Under the WDV method
Depreciation for the year ending 31st March 2021 can be calculated as follows:
Depreciation = Cost of the bus * Depreciation rate
Depreciation = Rs. 10,00,000 * 20% = Rs. 2,00,000
- Gain or Loss on Destroyed Bus:
Given:
- Cost of the bus purchased on 1st January 2019 = Rs. 8,00,000
- Insurance received for the damaged bus = Rs. 6,00,000
The carrying amount of the bus on the date of destruction (1st October 2020) is:
Carrying amount = Cost of the bus - Accumulated depreciation
Accumulated depreciation = Depreciation for the period from 1st January 2019 to 1st October 2020
Accumulated depreciation = (Rs. 8,00,000 * 20%) * (21/36) = Rs. 2,33,333.33
Carrying amount = Rs. 8,00,000 - Rs. 2,33,333.33 = Rs. 5,66,666.67
Therefore, the company incurred a loss of:
Loss = Carrying amount - Insurance received
Loss = Rs. 5,66,666.67 - Rs. 6,00,000 = Rs. 33,333.33
Hence, the company incurred a loss of Rs. 33,333.33 on the destroyed bus.
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