Skip to content

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

Vidya Society bought a piano on 1 April 2024 for ₹1,50,000 and sold an old piano (book value ₹40,000) on 1 October 2024 for ₹28,000. Depreciation at 10% p.a. is charged on the new piano only, for the full year. What is the net amount charged to the Income and Expenditure Account for these items?

The net charge is ₹27,000. Depreciation on the new piano is ₹15,000 and the loss on sale of the old piano is ₹12,000, being book value ₹40,000 less sale price ₹28,000. Both are expenses of the Income and Expenditure Account.

  1. A₹15,000
  2. B₹27,000Correct
  3. C₹12,000
  4. D₹3,000

Explanation

Depreciation on the new piano is 10% of 1,50,000 = ₹15,000. The loss on sale of the old piano is 40,000 − 28,000 = ₹12,000. Both are expenses, so the total is 15,000 + 12,000 = ₹27,000. Charging only depreciation ignores the loss on sale.

Did you get it right without looking?

One question tells you little. A timed set on Financial Statements of Not-for-Profit Organisations shows your real accuracy, how long you take and where you lose marks.

Practise Financial Statements of Not-for-Profit OrganisationsFree diagnostic mock

More Financial Statements of Not-for-Profit Organisations questions