Advanced AccountingQuestion 5267 of 305
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1. What will be the carrying amount of the Machine as on 31st March, 2021 after charging depreciation for the year?

Options

A` 28,00,000
B` 26,00,000
C` 41,00,000
D` 29,00,000
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Correct Answer

✅ Option D — ` 29,00,000

All Options:

  • A` 28,00,000
  • B` 26,00,000
  • C` 41,00,000
  • D` 29,00,000 ✓

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Detailed Solution & Explanation

To find the carrying amount of the Machine as on 31st March, 2021 after depreciation:
1. Under AS 12, the government grant of ‘ 15,00,000\displaystyle `\,15,00,000 is credited to the cost of the Machine (‘ 50,00,000\displaystyle `\,50,00,000), so net cost of the machine is:
Net Cost=‘ 50,00,000−‘ 15,00,000=‘ 35,00,000\text{Net Cost} = `\,50,00,000 - `\,15,00,000 = `\,35,00,0002. Spreading the depreciable amount (Net Cost - Residual Value) over the expected life of 10 years on SLM:
Annual Depreciation=‘ 35,00,000−‘ 5,00,00010=‘ 3,00,000\text{Annual Depreciation} = \frac{`\,35,00,000 - `\,5,00,000}{10} = `\,3,00,0003. Depreciation charged for 2 years (2019-20 and 2020-21):
Accumulated Depreciation=‘ 3,00,000×2=‘ 6,00,000\text{Accumulated Depreciation} = `\,3,00,000 \times 2 = `\,6,00,0004. Carrying Amount as on 31st March, 2021 (before refund):
Carrying Amount=‘ 35,00,000−‘ 6,00,000=‘ 29,00,000\text{Carrying Amount} = `\,35,00,000 - `\,6,00,000 = `\,29,00,000
Hence, **Option D** is the correct answer.

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.

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