Discuss the factors taken into consideration for calculation of depreciation. [Nov. 2020, 5 Marks]
Options
A
B
C
D
For any discrepancies in this question, email contact@cadada.in
Depreciation and AmortisationQ-4 | Depreciation and AmortisationQuestion 4740 of 42
All Questions Correct Answer
✅ Option — Correct Option
All Options:
- A
- B
- C
- D
Detailed Solution & Explanation
The elements relevant for deciding the rate/amount of depreciation are: •
Cost of acquisition (Costs necessary to put an asset into usable condition).
The estimated life of the asset.
Estimated scrap value at the end of its life.
Key Concepts to Understand
More Questions from Depreciation and Amortisation
The following details are available of raw material of a manufacturing unit : 1-5-2024 Opening Inventory 100 units @ Rs. 15 per unit 2-5-2024 Purchases 300 units @ Rs. 18 per unit 5-5-2024 Issued for consumption 250 units 16-5-2024 Purchases 500 units @ Rs. 21 per unit 21-5-2024 Issued for consumption 100 units 25-5-2024 Issued for consumption 450 units The manufacturer also incurred the following expenses: ◆ Freight of 300 and unloading charges of 150 at the time of every purchase respectively. ◆ Warehouse rent of ₹ 2,000 per month. ◆ Administrative Expenses of ₹ 1,500 per month. You are required to find out the value of inventory as on May 31, 2024 if the company follows: (a) Weighted Average method for inventory valuation. (b) First in First Out method for inventory valuation. [Jan. 2025, Marks 5]
Meaning of depreciation
Sum of Years of Digits Method
Depletion method
Amortisation [Dec. 2021, 1 Mark]
Diminishing Balance Method [Dec. 2023, 1 Mark]
Ready to Master Depreciation and Amortisation?
Practice all 42 questions with instant feedback, earn XP, track your streaks, and ace your CA Foundation exam.
Start Practicing — It's Free