Question

The balance in the accumulated provision for depreciation account of a company as at the beginning of the year was Rs. 2,00,000 when the original cost of the assets amounted to Rs. 10,00,000. The company charges 10% depreciation on a straight line basis for all the assets including those which have been either purchased or sold during the year. One such asset costing Rs. 5,00,000 with accumulated depreciation as at the beginning of the year of Rs. 80,00,000 was deposited off during the year.
Depreciation for the year is __________.

• A. Rs. 40,000
• B. Rs. 50,000
• C. Rs. 60,000
• D. Rs. 1,00,000

Answer 1

Answer: (D)

Rs. 1,00,000

Depreciation for the year = Asset at beginning of the year x depreciation rate

= 10,00,000 x 10/100

= RS-1,00,000.