Depreciation and AmortisationQ-5 | Depreciation and AmortisationQuestion 5088 of 42
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POR associates bought a computer set on 01.04.2020 for 2,00,000 and charged depreciation @ 20% p.a. on diminishing balance method. They made further additions as follows: Date Amount 01.04.2021 1,50,000 01.04.2023 1,00,000 On 01.04.2023 it was decided to change the method to straight line basis and charge depreciation assuming the expected life of all the computers to be 8 years from 01.04.2023. Prepare Computers A/c for year ending 31.03.2024. [Sept. 2024, 5 Marks]

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Detailed Solution & Explanation

### Depreciation on W.D.V. @ 20% | Particulars | Computer I (₹) | Computer II (₹) | | :--- | ---: | ---: | | **1.4.2020** | **2,00,000** | | | Depreciation | (40,000) | | | **1.4.2021** | **1,60,000** | **1,50,000** | | Depreciation | (32,000) | (30,000) | | **1.4.2022** | **1,28,000** | **1,20,000** | | Depreciation | (25,600) | (24,000) | | **1.4.2023 WDV** | **1,02,400** | **96,000** |
### Depreciation on SLM for 2023-24 | Particulars | Computer I (₹) | Computer II (₹) | Computer III (₹) | | :--- | :---: | :---: | :---: | | **Basis** | 1,02,400 / 8 | 96,000 / 8 | 1,00,000 / 8 | | Depreciation | (12,800) | (12,000) | (12,500) | | **Balance** | **89,600** | **84,000** | **87,500** |
### Computers Account | Date | Particulars | Amount (₹) | Date | Particulars | Amount (₹) | | :--- | :--- | ---: | :--- | :--- | ---: | | **1.4.2023**

| To Balance B/d [1,02,400+96,000\displaystyle 1,02,400 + 96,000]
To Bank III | 1,98,400
1,00,000 | **31.3.2024** | By Depreciation:
    I: 12,800
    II: 12,000
    III: 12,500
By Balance c/d:
    I: 89,600
    II: 84,000
    III: 87,500 |
37,300


2,61,100 | | | **TOTAL** | **2,98,400** | | **TOTAL** | **2,98,400** |

About This Chapter: BRS & Inventories

Paper

Paper 1: Accounting

Weightage

20-25%

Key Topics

Reconciliation, Valuation, Depreciation

This chapter covers Reconciliation, Valuation, Depreciation and is part of Paper 1: Accounting in the CA Foundation exam.

View Official ICAI Syllabus

Exam Strategy Tip

This topic carries 20-25% weightage. Focus on understanding core concepts rather than memorizing.

Key Concepts to Understand

Depreciation

Allocation of the cost of a tangible fixed asset over its useful life due to wear and tear, efflux of time, or obsolescence.

Set

A well-defined collection of distinct objects (called elements or members). Sets are denoted by capital letters and elements are listed within curly braces. Key operations include Union (∪), Intersection (∩), and Complement.

Related Comparison Tables

SLM vs WDV Depreciation: CA Foundation Accounts

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

Discuss the factors taken into consideration for calculation of depreciation. [Nov. 2020, 5 Marks]

Amortisation [Dec. 2021, 1 Mark]

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