CMA Foundation · Fundamentals of Financial and Cost Accounting · Financial Statements of Sole Proprietorship
Anil Kapoor's books show furniture of ₹1,00,000 on 1 April 2024. On 1 October 2024 he bought more furniture for ₹40,000. Depreciation is charged at 10% p.a. on the straight-line (original cost) basis, on a time basis. What is the depreciation for the year ended 31 March 2025?
Depreciation is ₹12,000: ₹10,000 on the opening furniture for the full year plus ₹2,000 on the new furniture of ₹40,000 for six months at 10% per annum.
- A₹14,000
- B₹12,000Correct
- C₹10,000
- D₹4,000
Explanation
Old furniture: 10% of 1,00,000 = 10,000 for the full year. New furniture: 10% of 40,000 for 6 months = 2,000. Total = 12,000. Option 14,000 charges the new asset for a full year.
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