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Question

A & C Ltd. manufacturing loose tools and spare parts for its own use at the each of each year depreciation is charged on revaluation method. What would be the annual depreciation charge for the year ending 31st March, 2014 from the following particulars:
(a) Loose tools in hand as on 1st April, 2013-Rs. 5100.
Loose tools manufacturing during 2012−13- Rs. 8,000.
Loose tools revalued as on 31−3−2014 - Rs. 9,100.

A
Rs.4,000
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B
Rs.3,500
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C
Rs.3,100
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D
Rs.1,900
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Solution

The correct option is B Rs.4,000
Annual depreciation charge = (loose tools on hand + loose tools manufactured during the year) - loose tool revalued
Annual depreciation charge = (Rs. 5,100 + Rs. 8,000) - RS. 9,100
Annual depreciation charge = Rs. 4,000

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