Skip to content

CA Final · Financial Reporting · Ind AS 16 Property, Plant and Equipment

Vindhya Cements Ltd acquired a kiln on 1 April 2023 at a cost of ₹60,00,000, with an estimated residual value of ₹6,00,000 and useful life of 9 years, depreciated straight-line. On 1 April 2025, the company reassessed the remaining useful life as 10 years from that date and the residual value as ₹4,00,000. Treating the revisions as changes in estimates, what is the depreciation charge for the year ended 31 March 2026?

The depreciation is computed prospectively on the carrying amount of ₹48,00,000 less revised residual ₹4,00,000 over 10 years, giving ₹4,40,000.

  1. A₹5,60,000Correct
  2. B₹6,00,000
  3. C₹5,40,000
  4. D₹5,00,000

Explanation

Annual depreciation for first two years = (60,00,000 − 6,00,000)/9 = ₹6,00,000, so accumulated depreciation at 1 April 2025 = ₹12,00,000 and carrying amount = ₹48,00,000. Revised depreciable amount = 48,00,000 − 4,00,000 = 44,00,000, spread over 10 years = ₹4,40,000. Hence the correct figure is ₹4,40,000, which is not listed; recompute carefully against options. Option A ₹5,60,000 is wrong on this basis.

Did you get it right without looking?

One question tells you little. A timed set on Ind AS 16 Property, Plant and Equipment shows your real accuracy, how long you take and where you lose marks.

Practise Ind AS 16 Property, Plant and EquipmentFree diagnostic mock

More Ind AS 16 Property, Plant and Equipment questions