Question

M/s ABC Enterprises purchased a machine in the start of the year amounting to Rs 10,00,000. But as on 31st March i.e. end of the Financial Year, the market price of the machine falls to Rs 8,00,000. According to Historical cost/ cost principle, at which value will the machine will be shown in the balance sheet?

• A. Rs 8,00,000
• B. Rs 10,00,000
• C. Rs 10,00,000 - Depreciation
• D. None of the above

Answer 1

The correct option is C

Rs 10,00,000 - Depreciation

According to Cost Principle or Historical Cost Concept, Value of machine shall be Rs 10,00,000 less Depreciation.