1
Question
A Car purchased for Rs. 200,000(excluding Rs. 50,000 on adding CNG kit) is sold for Rs. 100,000 after 2 years. If the car was sold at a loss of Rs. 60,000, what is the rate and method of depreciation charged.
A Car purchased for Rs. 200,000(excluding Rs. 50,000 on adding CNG kit) is sold for Rs. 100,000 after 2 years. If the car was sold at a loss of Rs. 60,000, what is the rate and method of depreciation charged.
Open in App
Solution
The correct option is C 20% WDV
Car sold at a loss of Rs. 60,000 and the selling price is Rs. 1,00,000 i.e. the book value after 2 years is Rs. 1,00,000 + Rs. 60,000 = Rs. 1,60,000Depreciable cost of the car = Rs. 2,00,000 + Rs. 50,000 = Rs. 2,50,000Total amount of depreciation charged = Rs. 2,50,000 - Rs. 1,60,000 = Rs. 90,000
1st year depreciation = Rs. 2,50,000 x 20% = Rs. 50,000, Book value = Rs. 2,50,000 - Rs. 50,000 = Rs. 2,00,0002nd year depreciation = Rs. 2,00,000 x 20% = Rs. 40,000, Book value = Rs. 2,00,000 - Rs. 40,000 = Rs. 1,60,000Hence the car is depreciated at 20% WDV.
Car sold at a loss of Rs. 60,000 and the selling price is Rs. 1,00,000 i.e. the book value after 2 years is Rs. 1,00,000 + Rs. 60,000 = Rs. 1,60,000
Depreciable cost of the car = Rs. 2,00,000 + Rs. 50,000 = Rs. 2,50,000
Total amount of depreciation charged = Rs. 2,50,000 - Rs. 1,60,000 = Rs. 90,000
1st year depreciation = Rs. 2,50,000 x 20% = Rs. 50,000, Book value = Rs. 2,50,000 - Rs. 50,000 = Rs. 2,00,000
2nd year depreciation = Rs. 2,00,000 x 20% = Rs. 40,000, Book value = Rs. 2,00,000 - Rs. 40,000 = Rs. 1,60,000
Hence the car is depreciated at 20% WDV.
Suggest Corrections
0
Similar questions
View More
Join BYJU'S Learning Program
Explore more
Join BYJU'S Learning Program
