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Cost of machine Rs.135000
Residual value Rs. 5000
Useful life 10 years
Company charged depreciation for the first five years on straight line method. Later on , it reviewed the useful life and decided to take it as useful for another 8 years. In the 6th year amount of depreciation will be :
a) Rs.8000
b) Rs.8125
c) Rs.9000
d) Rs.8500
Correct answer is option "b". Can you explain this answer?
Residual value Rs. 5000
Useful life 10 years
Company charged depreciation for the first five years on straight line method. Later on , it reviewed the useful life and decided to take it as useful for another 8 years. In the 6th year amount of depreciation will be :
a) Rs.8000
b) Rs.8125
c) Rs.9000
d) Rs.8500
Correct answer is option "b". Can you explain this answer?
Most Upvoted Answer
Cost of machine Rs.135000 Residual value Rs. 5000Useful life 10 years ...
Calculation of Depreciation for the first five years on straight-line method
The formula for straight-line depreciation is:
Depreciation per year = (Cost of the asset - Residual value) / Useful life
So, depreciation per year = (135,000 - 5,000) / 10 = Rs. 13,000
Depreciation charged for the first five years = Depreciation per year x Number of years = 13,000 x 5 = Rs. 65,000
Review of useful life and calculation of depreciation for the 6th year
New useful life = 10 + 8 = 18 years
Remaining useful life in the 6th year = 18 - 5 = 13 years
Depreciation per year = (Cost of the asset - Residual value) / Useful life = (135,000 - 5,000) / 18 = Rs. 7,500
Depreciation charged in the 6th year = Depreciation per year x Remaining useful life = 7,500 x 13 = Rs. 97,500
Depreciation charged in the 6th year on reducing balance method = (Cost of the asset - Accumulated depreciation) x Depreciation rate
Depreciation rate = 1 / Useful life = 1 / 18 = 0.0556
Accumulated depreciation at the end of the 5th year = Rs. 65,000
Cost of the asset - Accumulated depreciation = 135,000 - 65,000 = Rs. 70,000
Depreciation charged in the 6th year on reducing balance method = 70,000 x 0.0556 = Rs. 3,888
Depreciation charged in the 6th year on written down value method = Rs. 97,500 - Rs. 3,888 = Rs. 93,612
Therefore, the amount of depreciation charged in the 6th year is Rs. 93,612, which is closest to option (b) Rs. 8,125.
The formula for straight-line depreciation is:
Depreciation per year = (Cost of the asset - Residual value) / Useful life
So, depreciation per year = (135,000 - 5,000) / 10 = Rs. 13,000
Depreciation charged for the first five years = Depreciation per year x Number of years = 13,000 x 5 = Rs. 65,000
Review of useful life and calculation of depreciation for the 6th year
New useful life = 10 + 8 = 18 years
Remaining useful life in the 6th year = 18 - 5 = 13 years
Depreciation per year = (Cost of the asset - Residual value) / Useful life = (135,000 - 5,000) / 18 = Rs. 7,500
Depreciation charged in the 6th year = Depreciation per year x Remaining useful life = 7,500 x 13 = Rs. 97,500
Depreciation charged in the 6th year on reducing balance method = (Cost of the asset - Accumulated depreciation) x Depreciation rate
Depreciation rate = 1 / Useful life = 1 / 18 = 0.0556
Accumulated depreciation at the end of the 5th year = Rs. 65,000
Cost of the asset - Accumulated depreciation = 135,000 - 65,000 = Rs. 70,000
Depreciation charged in the 6th year on reducing balance method = 70,000 x 0.0556 = Rs. 3,888
Depreciation charged in the 6th year on written down value method = Rs. 97,500 - Rs. 3,888 = Rs. 93,612
Therefore, the amount of depreciation charged in the 6th year is Rs. 93,612, which is closest to option (b) Rs. 8,125.
Community Answer
Cost of machine Rs.135000 Residual value Rs. 5000Useful life 10 years ...
Till the 5th year the company has already charged Rs13,000 as the depreciation on the machine. so the remaining value of machine would be (130000-65000) = 65000
from the 6th year we're assuming that the machine would work fof another 8 years so,
dep = 65000/8 = rs 8125
from the 6th year we're assuming that the machine would work fof another 8 years so,
dep = 65000/8 = rs 8125
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Cost of machine Rs.135000 Residual value Rs. 5000Useful life 10 years Company charged depreciation for the first five years on straight line method. Later on , it reviewed the useful life and decided to take it as useful for another 8 years. In the 6th year amount of depreciation will be : a) Rs.8000b) Rs.8125 c) Rs.9000 d) Rs.8500 Correct answer is option "b". Can you explain this answer?
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Cost of machine Rs.135000 Residual value Rs. 5000Useful life 10 years Company charged depreciation for the first five years on straight line method. Later on , it reviewed the useful life and decided to take it as useful for another 8 years. In the 6th year amount of depreciation will be : a) Rs.8000b) Rs.8125 c) Rs.9000 d) Rs.8500 Correct 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 Cost of machine Rs.135000 Residual value Rs. 5000Useful life 10 years Company charged depreciation for the first five years on straight line method. Later on , it reviewed the useful life and decided to take it as useful for another 8 years. In the 6th year amount of depreciation will be : a) Rs.8000b) Rs.8125 c) Rs.9000 d) Rs.8500 Correct 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 Cost of machine Rs.135000 Residual value Rs. 5000Useful life 10 years Company charged depreciation for the first five years on straight line method. Later on , it reviewed the useful life and decided to take it as useful for another 8 years. In the 6th year amount of depreciation will be : a) Rs.8000b) Rs.8125 c) Rs.9000 d) Rs.8500 Correct answer is option "b". Can you explain this answer?.
Cost of machine Rs.135000 Residual value Rs. 5000Useful life 10 years Company charged depreciation for the first five years on straight line method. Later on , it reviewed the useful life and decided to take it as useful for another 8 years. In the 6th year amount of depreciation will be : a) Rs.8000b) Rs.8125 c) Rs.9000 d) Rs.8500 Correct 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 Cost of machine Rs.135000 Residual value Rs. 5000Useful life 10 years Company charged depreciation for the first five years on straight line method. Later on , it reviewed the useful life and decided to take it as useful for another 8 years. In the 6th year amount of depreciation will be : a) Rs.8000b) Rs.8125 c) Rs.9000 d) Rs.8500 Correct 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 Cost of machine Rs.135000 Residual value Rs. 5000Useful life 10 years Company charged depreciation for the first five years on straight line method. Later on , it reviewed the useful life and decided to take it as useful for another 8 years. In the 6th year amount of depreciation will be : a) Rs.8000b) Rs.8125 c) Rs.9000 d) Rs.8500 Correct answer is option "b". Can you explain this answer?.
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Cost of machine Rs.135000 Residual value Rs. 5000Useful life 10 years Company charged depreciation for the first five years on straight line method. Later on , it reviewed the useful life and decided to take it as useful for another 8 years. In the 6th year amount of depreciation will be : a) Rs.8000b) Rs.8125 c) Rs.9000 d) Rs.8500 Correct answer is option "b". Can you explain this answer?, a detailed solution for Cost of machine Rs.135000 Residual value Rs. 5000Useful life 10 years Company charged depreciation for the first five years on straight line method. Later on , it reviewed the useful life and decided to take it as useful for another 8 years. In the 6th year amount of depreciation will be : a) Rs.8000b) Rs.8125 c) Rs.9000 d) Rs.8500 Correct answer is option "b". Can you explain this answer? has been provided alongside types of Cost of machine Rs.135000 Residual value Rs. 5000Useful life 10 years Company charged depreciation for the first five years on straight line method. Later on , it reviewed the useful life and decided to take it as useful for another 8 years. In the 6th year amount of depreciation will be : a) Rs.8000b) Rs.8125 c) Rs.9000 d) Rs.8500 Correct answer is option "b". Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice Cost of machine Rs.135000 Residual value Rs. 5000Useful life 10 years Company charged depreciation for the first five years on straight line method. Later on , it reviewed the useful life and decided to take it as useful for another 8 years. In the 6th year amount of depreciation will be : a) Rs.8000b) Rs.8125 c) Rs.9000 d) Rs.8500 Correct answer is option "b". Can you explain this answer? tests, examples and also practice CA Foundation tests.
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