The only vehicle owned by a company is reported at its cost of Rs. 50,000 in the Motor Vehicle account, while the depreciation on the vehicle written off in each of the three years of use is reported in an Accumulated depreciation account at Rs. 25,000.

Which of the following statements is incorrect regarding when the whole of Rs. 25,000 need to be transferred away from the Accumulated depreciation account.

When the asset is revalued

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When the asset is traded in for another

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When the asset is disposed off

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When the financial statements are prepared every year

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Solution

The correct option is D
When the financial statements are prepared every year

It is not transferred annually. Hence not to be transferred at the time of preparation of financial statements every year.

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Similar questions

Q. On the basis of following information answer the following question.

The balance in accumulated depreciation account of a company at the beginning of year

2008 - 2009

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 SLM basis for all assets including those which have been either purchased or sold during the year. One such asset costing Rs.

5, 00, 000

which accumulated depreciation as at the beginning of the year of Rs

80, 000

was disposed off during the year.

The balance of the accumulated depreciation account at the end of the year considering the current year's depreciation charge would be ______________.

The balances in Equipment account and Accumulated depreciation account as on March 31, 2015 and 2016 are given below:
$\begin{matrix} Balance as at & March 31, 2015 & March 31, 2016 Equipment & 65, 00, 000 & 78, 70, 000 Accumulated depreciation & 10, 80, 000 & 16, 32, 000 \end{matrix}$
The equipment costing Rs. 12,30,000 accumulated depreciation thereon Rs. 7,18,000 was sold for Rs. 4,68,000.
Required:
(i) Compute the amount of equipment purchased, depreciation charged for the year and loss on sale of equipment.
(ii) How each of the item related to the equipment will be reported in the statement of cash flows?

A firm owns a fleet of vehicles acquired at a total cost of Rs. 2,64,800.
Accumulated depreciation up to the beginning of the current year is Rs. 1,12,400. Vehicles are depreciated at 20% per annum using the straight-line method.
The value of depreciation for the current year would be?

Sunny ltd. purchased a vehicle for Rs. 4,00,000 After 4 years its salvage value is estimated at Rs. 40,000. Find out the amount of depreciation to be charged every year based on a straight line basis and show how to vehicle account would appear for 4 years assuming, it is sold for Rs. 50,000 at the end, when provision for depreciation account is maintained.

The asset has an original cost of Rs. 10,000 and accumulated depreciation of Rs. 8,000. We want to completely eliminate it from the accounting records, so we credit the asset account for Rs. 10,000, debit the accumulated depreciation account for Rs. 8,000, and debit the _____ by _____.

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The correct option is D When the financial statements are prepared every year It is not transferred annually. Hence not to be transferred at the time of preparation of financial statements every year.

The correct option is D
When the financial statements are prepared every year

It is not transferred annually. Hence not to be transferred at the time of preparation of financial statements every year.