Question

Mohan purchased a machinery amounting Rs.10,000 on 1.4.2010.
On 31.3.2019, similar machinery could be purchased for Rs.20,000 but the realizable value of the machinery (purchased on 1.4.2010) was estimated at Rs.15,000. The present discounted value of the future net cash inflows that the machinery was expected to generate in the normal course of business, was calculated as Rs 12,000.
The historical cost of machinery is ____________.

• A. Rs.10,000
• B. Rs.20,000
• C. Rs. 15,000
• D. Rs. 12,000

Answer 1

The correct option is A Rs.10,000

The historical cost of machinery is 10,000 as historical cost means that cost at which the asset was purchased.