Advanced AccountingMCQQuestion 5929 of 302
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4. X Ltd. has entered into a binding agreement with Beta Ltd. to buy a custom­ made machine for ₹ 2 lakhs. During the year 2024-25 X Ltd has to change its method of production due to changes in market trend. Before the delivery of the machine, X Ltd had already changed its method of production and the new method will not require the machine ordered. Now the company decides to scrap it after delivery. The expected scrap value is ₹ 25,000. Machine was received on 10th October, 2024 and was scrapped on 15th October, 2024. The correct accounting treatment for above machine in the year 2024-25 is -

Select Your Answer (Keyboard: A, B, C, D)
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Correct Answer

✅ Option A — Machine A/c to be debited with ₹ 2 lakhs and Bank A/c to be credited with ₹ 2 lakhs.

All Options:

  • AMachine A/c to be debited with ₹ 2 lakhs and Bank A/c to be credited with ₹ 2 lakhs. ✓
  • BImpairment A/c to be debited with ₹ 1.75 lakhs and Bank A/c to be credited with ₹ 1.75 lakhs.
  • CProfit and Loss A/c to be debited with ₹ 2 lakhs and Bank A/c to be credited with ₹ 2 lakhs.
  • DProfit and Loss A/c to be debited with ₹ 1.75 lakhs and Bank A/c to be credited with ₹ 1.75 lakhs. ADVANCED ACCOUNTING

Detailed Solution & Explanation

Correct Answer: Option **A** Explanation: As per the official suggested answer, option **A** is correct. Hence, **Option A** is the correct answer.

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