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A machine was bought at a cost of Rs. 5 lacs on 1.1.02. During its life of 10 years, it will be depreciated on SLM basis. On 31.12.08, the machine was sold for Rs. 50,000. Find out the profit/loss?
- a)Loss of Rs. 1,50,000
- b)Loss of 1,00,000
- c)Profit of Rs. 1,00,000
- d)Profit of Rs. 1,50,000
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
A machine was bought at a cost of Rs. 5 lacs on 1.1.02. During its lif...
Given:
- Cost of the machine = Rs. 5,00,000
- Life of the machine = 10 years
- Depreciation method: Straight Line Method (SLM)
- Selling price of the machine = Rs. 50,000
To find:
- Profit or loss
Solution:
1. Calculate the annual depreciation:
- Depreciation = (Cost of the machine - Salvage value) / Useful life
- Salvage value = Selling price of the machine
- Useful life = 10 years
Depreciation = (5,00,000 - 50,000) / 10 = 4,50,000 / 10 = 45,000
2. Calculate the total depreciation for 7 years (2002-2008):
- Total depreciation = Annual depreciation * Number of years
- Number of years = 2008 - 2002 = 6 years
Total depreciation = 45,000 * 6 = 2,70,000
3. Calculate the book value of the machine on 31.12.08:
- Book value = Cost of the machine - Total depreciation
- Book value = 5,00,000 - 2,70,000 = 2,30,000
4. Calculate the profit/loss:
- Profit/Loss = Selling price - Book value
- Profit/Loss = 50,000 - 2,30,000 = -1,80,000
Since the result is negative, it indicates a loss.
Conclusion:
The machine was sold at a loss of Rs. 1,80,000. Therefore, option 'b' is the correct answer.
- Cost of the machine = Rs. 5,00,000
- Life of the machine = 10 years
- Depreciation method: Straight Line Method (SLM)
- Selling price of the machine = Rs. 50,000
To find:
- Profit or loss
Solution:
1. Calculate the annual depreciation:
- Depreciation = (Cost of the machine - Salvage value) / Useful life
- Salvage value = Selling price of the machine
- Useful life = 10 years
Depreciation = (5,00,000 - 50,000) / 10 = 4,50,000 / 10 = 45,000
2. Calculate the total depreciation for 7 years (2002-2008):
- Total depreciation = Annual depreciation * Number of years
- Number of years = 2008 - 2002 = 6 years
Total depreciation = 45,000 * 6 = 2,70,000
3. Calculate the book value of the machine on 31.12.08:
- Book value = Cost of the machine - Total depreciation
- Book value = 5,00,000 - 2,70,000 = 2,30,000
4. Calculate the profit/loss:
- Profit/Loss = Selling price - Book value
- Profit/Loss = 50,000 - 2,30,000 = -1,80,000
Since the result is negative, it indicates a loss.
Conclusion:
The machine was sold at a loss of Rs. 1,80,000. Therefore, option 'b' is the correct answer.
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Community Answer
A machine was bought at a cost of Rs. 5 lacs on 1.1.02. During its lif...
Total Depreciation = Depreciation per year * number of year usage
Now,
Depreciation per year = Cost of Asset/ Estimated Life of Asset
= 5,00,000/10
= 50,000
:. Total Depreciation = 50,000 * 7
= 3,50,000
Loss on Sale = Present Value - Selling Price
= 1,50,000 - 50,000
= 1,00,000
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A machine was bought at a cost of Rs. 5 lacs on 1.1.02. During its life of 10 years, it will be depreciated on SLM basis. On 31.12.08, the machine was sold for Rs. 50,000. Find out the profit/loss?a)Loss of Rs. 1,50,000b)Loss of 1,00,000c)Profit of Rs. 1,00,000d)Profit of Rs. 1,50,000Correct answer is option 'B'. Can you explain this answer?
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A machine was bought at a cost of Rs. 5 lacs on 1.1.02. During its life of 10 years, it will be depreciated on SLM basis. On 31.12.08, the machine was sold for Rs. 50,000. Find out the profit/loss?a)Loss of Rs. 1,50,000b)Loss of 1,00,000c)Profit of Rs. 1,00,000d)Profit of Rs. 1,50,000Correct answer is option 'B'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A machine was bought at a cost of Rs. 5 lacs on 1.1.02. During its life of 10 years, it will be depreciated on SLM basis. On 31.12.08, the machine was sold for Rs. 50,000. Find out the profit/loss?a)Loss of Rs. 1,50,000b)Loss of 1,00,000c)Profit of Rs. 1,00,000d)Profit of Rs. 1,50,000Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A machine was bought at a cost of Rs. 5 lacs on 1.1.02. During its life of 10 years, it will be depreciated on SLM basis. On 31.12.08, the machine was sold for Rs. 50,000. Find out the profit/loss?a)Loss of Rs. 1,50,000b)Loss of 1,00,000c)Profit of Rs. 1,00,000d)Profit of Rs. 1,50,000Correct answer is option 'B'. Can you explain this answer?.
A machine was bought at a cost of Rs. 5 lacs on 1.1.02. During its life of 10 years, it will be depreciated on SLM basis. On 31.12.08, the machine was sold for Rs. 50,000. Find out the profit/loss?a)Loss of Rs. 1,50,000b)Loss of 1,00,000c)Profit of Rs. 1,00,000d)Profit of Rs. 1,50,000Correct answer is option 'B'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A machine was bought at a cost of Rs. 5 lacs on 1.1.02. During its life of 10 years, it will be depreciated on SLM basis. On 31.12.08, the machine was sold for Rs. 50,000. Find out the profit/loss?a)Loss of Rs. 1,50,000b)Loss of 1,00,000c)Profit of Rs. 1,00,000d)Profit of Rs. 1,50,000Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A machine was bought at a cost of Rs. 5 lacs on 1.1.02. During its life of 10 years, it will be depreciated on SLM basis. On 31.12.08, the machine was sold for Rs. 50,000. Find out the profit/loss?a)Loss of Rs. 1,50,000b)Loss of 1,00,000c)Profit of Rs. 1,00,000d)Profit of Rs. 1,50,000Correct answer is option 'B'. Can you explain this answer?.
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A machine was bought at a cost of Rs. 5 lacs on 1.1.02. During its life of 10 years, it will be depreciated on SLM basis. On 31.12.08, the machine was sold for Rs. 50,000. Find out the profit/loss?a)Loss of Rs. 1,50,000b)Loss of 1,00,000c)Profit of Rs. 1,00,000d)Profit of Rs. 1,50,000Correct answer is option 'B'. Can you explain this answer?, a detailed solution for A machine was bought at a cost of Rs. 5 lacs on 1.1.02. During its life of 10 years, it will be depreciated on SLM basis. On 31.12.08, the machine was sold for Rs. 50,000. Find out the profit/loss?a)Loss of Rs. 1,50,000b)Loss of 1,00,000c)Profit of Rs. 1,00,000d)Profit of Rs. 1,50,000Correct answer is option 'B'. Can you explain this answer? has been provided alongside types of A machine was bought at a cost of Rs. 5 lacs on 1.1.02. During its life of 10 years, it will be depreciated on SLM basis. On 31.12.08, the machine was sold for Rs. 50,000. Find out the profit/loss?a)Loss of Rs. 1,50,000b)Loss of 1,00,000c)Profit of Rs. 1,00,000d)Profit of Rs. 1,50,000Correct answer is option 'B'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice A machine was bought at a cost of Rs. 5 lacs on 1.1.02. During its life of 10 years, it will be depreciated on SLM basis. On 31.12.08, the machine was sold for Rs. 50,000. Find out the profit/loss?a)Loss of Rs. 1,50,000b)Loss of 1,00,000c)Profit of Rs. 1,00,000d)Profit of Rs. 1,50,000Correct answer is option 'B'. Can you explain this answer? tests, examples and also practice CA Foundation tests.
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