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Question

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.


A

When the asset is revalued

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B

When the asset is traded in for another

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C

When the asset is disposed off

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D

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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