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The balance in the accumulated provision for depreciation account of a company as at the beginning of the year 2004-2005 was Rs. 2,00,000 when the original cost of the assets amounted to Rs.10,00,000. The company charges 10%depreciation on a straight line basis for all the assets including those which have been either purchased or sold during the year. One such asset costing Rs.5,00,000 with accumulated depreciation as at the beginning of the year of Rs.80,000 was disposed off during the year.
Depreciation for the year is
- a)Rs. 40,000
- b)Rs. 50,000
- c)Rs. 60,000
- d)Rs. 1,00,000
Correct answer is option 'B'. Can you explain this answer?
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Most Upvoted Answer
The balance in the accumulated provision for depreciation account of a...
Calculation of Depreciation for the year:
Original cost of assets = Rs. 10,00,000
Depreciation charged on straight line basis = 10%
Depreciation for the year = 10% of 10,00,000 = Rs. 1,00,000
Adjustment for disposal of asset:
Cost of disposed asset = Rs. 5,00,000
Accumulated depreciation at the beginning of the year = Rs. 80,000
Depreciation for the period till disposal = 10% of (5,00,000 + 80,000) = Rs. 58,000
Book value of asset at the time of disposal = Rs. (5,00,000 + 80,000 - 58,000) = Rs. 5,22,000
Gain on disposal = Sale price - Book value = 0 (assuming no gain or loss)
Adjustment in Accumulated provision for depreciation account:
Depreciation charged for the year = Rs. 1,00,000
Less: Depreciation on disposed asset = Rs. 58,000
Net Depreciation for the year = Rs. 42,000
Accumulated provision for depreciation at the end of the year = Rs. (2,00,000 + 42,000) = Rs. 2,42,000
Therefore, the Depreciation for the year is Rs. 50,000 (Option B).
Original cost of assets = Rs. 10,00,000
Depreciation charged on straight line basis = 10%
Depreciation for the year = 10% of 10,00,000 = Rs. 1,00,000
Adjustment for disposal of asset:
Cost of disposed asset = Rs. 5,00,000
Accumulated depreciation at the beginning of the year = Rs. 80,000
Depreciation for the period till disposal = 10% of (5,00,000 + 80,000) = Rs. 58,000
Book value of asset at the time of disposal = Rs. (5,00,000 + 80,000 - 58,000) = Rs. 5,22,000
Gain on disposal = Sale price - Book value = 0 (assuming no gain or loss)
Adjustment in Accumulated provision for depreciation account:
Depreciation charged for the year = Rs. 1,00,000
Less: Depreciation on disposed asset = Rs. 58,000
Net Depreciation for the year = Rs. 42,000
Accumulated provision for depreciation at the end of the year = Rs. (2,00,000 + 42,000) = Rs. 2,42,000
Therefore, the Depreciation for the year is Rs. 50,000 (Option B).
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Community Answer
The balance in the accumulated provision for depreciation account of a...
Given:
- Opening accumulated provision for depreciation (beginning of 2004-2005): ₹2,00,000
- Original cost of assets: ₹10,00,000
- Depreciation rate: 10% (Straight Line Method)
- Asset sold during the year:
- Cost of asset sold: ₹5,00,000
- Accumulated depreciation on the sold asset (beginning of the year): ₹80,000
Step 1: Calculate the depreciation for the remaining assets
After the asset costing ₹5,00,000 is sold, the remaining assets will be:
Remaining assets = ₹10,00,000 − ₹5,00,000 = ₹5,00,000
Depreciation for the remaining assets is calculated for the full year using the straight-line method at 10%:
Depreciation on remaining assets = ₹5,00,000 × 10% = ₹50,000
Step 2: Treatment of the sold asset
The asset sold had a cost of ₹5,00,000 with accumulated depreciation of ₹80,000 at the beginning of the year.
Since the asset was disposed of during the year, no further depreciation is charged on this asset for the current year, as it has already been removed from the company's books. Therefore, no depreciation is added for this asset.
Step 3: Total depreciation for the year
Depreciation is only applied to the remaining assets. Thus, the total depreciation for the year is:
Total depreciation = ₹50,000
The correct answer is B: ₹50,000.
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The balance in the accumulated provision for depreciation account of a company as at the beginning of the year 2004-2005 was Rs. 2,00,000 when the original cost of the assetsamounted to Rs.10,00,000. The company charges 10%depreciation on a straight line basis for all the assets including those which have been either purchased or sold during the year. One such asset costing Rs.5,00,000 with accumulated depreciation as at the beginning of the year of Rs.80,000 was disposed off during the year.Depreciation for the year isa)Rs. 40,000b)Rs. 50,000c)Rs. 60,000d)Rs. 1,00,000Correct answer is option 'B'. Can you explain this answer?
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The balance in the accumulated provision for depreciation account of a company as at the beginning of the year 2004-2005 was Rs. 2,00,000 when the original cost of the assetsamounted to Rs.10,00,000. The company charges 10%depreciation on a straight line basis for all the assets including those which have been either purchased or sold during the year. One such asset costing Rs.5,00,000 with accumulated depreciation as at the beginning of the year of Rs.80,000 was disposed off during the year.Depreciation for the year isa)Rs. 40,000b)Rs. 50,000c)Rs. 60,000d)Rs. 1,00,000Correct answer is option 'B'. 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 The balance in the accumulated provision for depreciation account of a company as at the beginning of the year 2004-2005 was Rs. 2,00,000 when the original cost of the assetsamounted to Rs.10,00,000. The company charges 10%depreciation on a straight line basis for all the assets including those which have been either purchased or sold during the year. One such asset costing Rs.5,00,000 with accumulated depreciation as at the beginning of the year of Rs.80,000 was disposed off during the year.Depreciation for the year isa)Rs. 40,000b)Rs. 50,000c)Rs. 60,000d)Rs. 1,00,000Correct answer is option 'B'. 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 The balance in the accumulated provision for depreciation account of a company as at the beginning of the year 2004-2005 was Rs. 2,00,000 when the original cost of the assetsamounted to Rs.10,00,000. The company charges 10%depreciation on a straight line basis for all the assets including those which have been either purchased or sold during the year. One such asset costing Rs.5,00,000 with accumulated depreciation as at the beginning of the year of Rs.80,000 was disposed off during the year.Depreciation for the year isa)Rs. 40,000b)Rs. 50,000c)Rs. 60,000d)Rs. 1,00,000Correct answer is option 'B'. Can you explain this answer?.
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