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CA Foundation · Accounting · Financial Statements of Not-for-Profit Organisations

A club's Receipts and Payments Account shows payments for sports equipment of ₹90,000 during the year. Sports equipment in the Balance Sheet was ₹1,50,000 at the start. The club charges depreciation of 10% on the written down value at year end, including on additions made during the year. What amount is debited to the Income and Expenditure Account for depreciation?

Depreciation charged is ₹24,000. The equipment base is the opening ₹1,50,000 plus the ₹90,000 purchased, totalling ₹2,40,000, and 10% of this is ₹24,000. The purchase cost itself is capital and is not debited to the Income and Expenditure Account.

  1. A₹24,000Correct
  2. B₹15,000
  3. C₹9,000
  4. D₹22,500

Explanation

Equipment at year end before depreciation = 1,50,000 + 90,000 = 2,40,000. Depreciation at 10% = ₹24,000. The purchase itself is capital and is not charged. Option ₹15,000 ignores the addition.

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