CSEET · Fundamentals of Accounting · Depreciation and Amortization
Kapoor Ltd bought furniture on 1 April 2023 for Rs 2,40,000 with no residual value and a 10-year life, depreciating it on the straight line method. The book value at 31 March 2026 is:
The book value is Rs 1,68,000. Yearly straight line depreciation is Rs 24,000, and three full years from April 2023 to March 2026 total Rs 72,000. Subtracting this accumulated depreciation from the cost of Rs 2,40,000 gives the carrying amount.
- ARs 1,68,000Correct
- BRs 1,92,000
- CRs 1,72,800
- DRs 72,000
Explanation
Annual depreciation = 2,40,000/10 = 24,000. Three years (2023-24, 2024-25, 2025-26) give 72,000. Book value = 2,40,000 - 72,000 = 1,68,000. Rs 72,000 is only the accumulated depreciation, while Rs 1,92,000 deducts one year only.
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