A purchased a machinery amounting to Rs.15,00,000 on 1st April, 2000. On 31st March, 2006, the similar machinery could be purchased for Rs. 25,00,000. The present discounted value of the future net cash inflows of that machinery was calculated as Rs. 13,00,000.
On the basis of above the historical cost of machinery is ___________.

R s . 10, 00, 000

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R s . 25, 00, 000

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R s . 15, 00, 000

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R s . 13, 00, 000

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Solution

The correct option is D $R s . 15, 00, 000$
Historical cost of machinery means cost incurred to acquired the machinery up to the point it is ready for use. In other words, it is the original cost of an asset, as recorded in an entity's accounting records.
For e.g. A purchased machinery amounting to $R s . 15, 00, 000$ on 1st April, 2000, the historical cost of machinery would be $R s . 15, 00, 000$ only.

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