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Vijay Traders purchased Car on 1.4.08 for Rs. 3,00,000. They are charging depreciation on written Down Value method. On 31.3.09 they sold the Car for Rs. 1,65,000 and incurred a loss of Rs. 7,5000. The rate of depreciation p.a. is :-
- a)10%
- b)15%
- c)20%
- d)25%
Correct answer is option 'C'. Can you explain this answer?
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Vijay Traders purchased Car on 1.4.08 for Rs. 3,00,000. They are charg...
Depreciation on Written Down Value Method
Depreciation is the reduction in the value of an asset over time due to wear and tear, obsolescence or any other reason. The Written Down Value Method is a method of charging depreciation where the depreciation is charged on the remaining book value of the asset at the beginning of the year. The rate of depreciation is applied to the book value and the resulting amount is charged as depreciation.
Given Information
Vijay Traders purchased Car on 1.4.08 for Rs. 3,00,000 and on 31.3.09 they sold the Car for Rs. 1,65,000 and incurred a loss of Rs. 7,5000.
Calculation of Depreciation Rate
The depreciation rate can be calculated using the following formula:
Depreciation Rate = (Cost of Asset - Scrap Value) / Total Depreciable Life
Where,
Cost of Asset = Rs. 3,00,000
Scrap Value = Value of the asset at the end of its useful life
Total Depreciable Life = Number of years over which the asset is expected to be used
In this case, the scrap value of the car is not given. Therefore, it can be assumed to be zero. The total depreciable life of the car is 1 year.
Depreciation Rate = (Cost of Asset - Scrap Value) / Total Depreciable Life
Depreciation Rate = (Rs. 3,00,000 - Rs. 0) / 1
Depreciation Rate = Rs. 3,00,000
The depreciation rate is Rs. 3,00,000. This means that the car has been charged depreciation at the rate of 20% (Rs. 3,00,000 / Rs. 15,00,000) per annum.
Calculation of Loss on Sale of Car
The loss on sale of the car can be calculated using the following formula:
Loss on Sale of Car = Original Cost of Asset - Sale Proceeds + Depreciation
Where,
Original Cost of Asset = Rs. 3,00,000
Sale Proceeds = Rs. 1,65,000
Depreciation = (Original Cost of Asset x Depreciation Rate)
Depreciation = (Rs. 3,00,000 x 20%) = Rs. 60,000
Loss on Sale of Car = Original Cost of Asset - Sale Proceeds + Depreciation
Loss on Sale of Car = Rs. 3,00,000 - Rs. 1,65,000 + Rs. 60,000
Loss on Sale of Car = Rs. 97,500
Therefore, the loss on the sale of the car is Rs. 97,500.
Depreciation is the reduction in the value of an asset over time due to wear and tear, obsolescence or any other reason. The Written Down Value Method is a method of charging depreciation where the depreciation is charged on the remaining book value of the asset at the beginning of the year. The rate of depreciation is applied to the book value and the resulting amount is charged as depreciation.
Given Information
Vijay Traders purchased Car on 1.4.08 for Rs. 3,00,000 and on 31.3.09 they sold the Car for Rs. 1,65,000 and incurred a loss of Rs. 7,5000.
Calculation of Depreciation Rate
The depreciation rate can be calculated using the following formula:
Depreciation Rate = (Cost of Asset - Scrap Value) / Total Depreciable Life
Where,
Cost of Asset = Rs. 3,00,000
Scrap Value = Value of the asset at the end of its useful life
Total Depreciable Life = Number of years over which the asset is expected to be used
In this case, the scrap value of the car is not given. Therefore, it can be assumed to be zero. The total depreciable life of the car is 1 year.
Depreciation Rate = (Cost of Asset - Scrap Value) / Total Depreciable Life
Depreciation Rate = (Rs. 3,00,000 - Rs. 0) / 1
Depreciation Rate = Rs. 3,00,000
The depreciation rate is Rs. 3,00,000. This means that the car has been charged depreciation at the rate of 20% (Rs. 3,00,000 / Rs. 15,00,000) per annum.
Calculation of Loss on Sale of Car
The loss on sale of the car can be calculated using the following formula:
Loss on Sale of Car = Original Cost of Asset - Sale Proceeds + Depreciation
Where,
Original Cost of Asset = Rs. 3,00,000
Sale Proceeds = Rs. 1,65,000
Depreciation = (Original Cost of Asset x Depreciation Rate)
Depreciation = (Rs. 3,00,000 x 20%) = Rs. 60,000
Loss on Sale of Car = Original Cost of Asset - Sale Proceeds + Depreciation
Loss on Sale of Car = Rs. 3,00,000 - Rs. 1,65,000 + Rs. 60,000
Loss on Sale of Car = Rs. 97,500
Therefore, the loss on the sale of the car is Rs. 97,500.
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Vijay Traders purchased Car on 1.4.08 for Rs. 3,00,000. They are charg...
Vardhaman Traders purchased a machinery on 4.4.2019 at a price of Rs 250000 and paid Rs50000 on the carriage of the machinery to bring it to the factory premises. The management decides that charging depreciation as per the WDV method will make more sense. It was decided that – The depreciation would be charged @15% on WDV method The useful life of the machinery is 5 years The machinery has been disposed off at the completion of 3 years at a value of Rs200000 Required
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Vijay Traders purchased Car on 1.4.08 for Rs. 3,00,000. They are charging depreciation on written Down Value method. On 31.3.09 they sold the Car for Rs. 1,65,000 and incurred a loss of Rs. 7,5000. The rate of depreciation p.a. is :-a)10%b)15%c)20%d)25%Correct answer is option 'C'. Can you explain this answer?
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Vijay Traders purchased Car on 1.4.08 for Rs. 3,00,000. They are charging depreciation on written Down Value method. On 31.3.09 they sold the Car for Rs. 1,65,000 and incurred a loss of Rs. 7,5000. The rate of depreciation p.a. is :-a)10%b)15%c)20%d)25%Correct answer is option 'C'. 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 Vijay Traders purchased Car on 1.4.08 for Rs. 3,00,000. They are charging depreciation on written Down Value method. On 31.3.09 they sold the Car for Rs. 1,65,000 and incurred a loss of Rs. 7,5000. The rate of depreciation p.a. is :-a)10%b)15%c)20%d)25%Correct answer is option 'C'. 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 Vijay Traders purchased Car on 1.4.08 for Rs. 3,00,000. They are charging depreciation on written Down Value method. On 31.3.09 they sold the Car for Rs. 1,65,000 and incurred a loss of Rs. 7,5000. The rate of depreciation p.a. is :-a)10%b)15%c)20%d)25%Correct answer is option 'C'. Can you explain this answer?.
Vijay Traders purchased Car on 1.4.08 for Rs. 3,00,000. They are charging depreciation on written Down Value method. On 31.3.09 they sold the Car for Rs. 1,65,000 and incurred a loss of Rs. 7,5000. The rate of depreciation p.a. is :-a)10%b)15%c)20%d)25%Correct answer is option 'C'. 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 Vijay Traders purchased Car on 1.4.08 for Rs. 3,00,000. They are charging depreciation on written Down Value method. On 31.3.09 they sold the Car for Rs. 1,65,000 and incurred a loss of Rs. 7,5000. The rate of depreciation p.a. is :-a)10%b)15%c)20%d)25%Correct answer is option 'C'. 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 Vijay Traders purchased Car on 1.4.08 for Rs. 3,00,000. They are charging depreciation on written Down Value method. On 31.3.09 they sold the Car for Rs. 1,65,000 and incurred a loss of Rs. 7,5000. The rate of depreciation p.a. is :-a)10%b)15%c)20%d)25%Correct answer is option 'C'. Can you explain this answer?.
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