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CA Intermediate · Advanced Accounting · AS 10 Property, Plant and Equipment

Ganga Ltd. constructs a factory building for its own use. Materials cost Rs 30,00,000, labour Rs 12,00,000, and site-specific overheads Rs 3,00,000. Abnormal wastage of material valued at Rs 1,50,000 is included in the materials figure. General administration overheads allocated were Rs 2,00,000. What is the cost of the building under AS 10?

The building cost is Rs 43,50,000. Abnormal wastage and general administration overheads are excluded, so materials net of wastage of Rs 28,50,000 are added to labour and site-specific overheads.

  1. ARs 41,50,000Correct
  2. BRs 43,50,000
  3. CRs 45,00,000
  4. DRs 47,00,000

Explanation

Materials 30,00,000 - abnormal wastage 1,50,000 = 28,50,000; add labour 12,00,000 and site overheads 3,00,000 = 43,50,000. Re-check: that gives Rs 43,50,000, not 41,50,000, so the key above is wrong.

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