CA Foundation · Accounting · Depreciation and Amortisation
Anand Media Ltd. bought a publishing right on 1 October 2023 for ₹9,00,000. It is available for use immediately, its useful life is 6 years, and residual value is nil. Using the straight-line method, what is the amortisation charge for the year ended 31 March 2024?
The amortisation for the year ended 31 March 2024 is ₹75,000. Annual straight-line amortisation is ₹9,00,000 divided by 6 years, or ₹1,50,000, and only six months of use fall in the year, so half is charged.
- A₹75,000Correct
- B₹1,50,000
- C₹90,000
- D₹45,000
Explanation
Annual amortisation = 9,00,000 / 6 = ₹1,50,000. The asset was used for 6 months (October to March), so the charge is 1,50,000 × 6/12 = ₹75,000. The distractor ₹1,50,000 ignores the part-year period.
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