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Couldn't understand Logic.

May 2020 Foundation exam question. 1)Couldnt understand the logic of depreciation in this question, especially of Furniture.

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G Aldrin

G Aldrin

CA Inter

11K+

13-Oct-20

55

Answers (11)

Furniture sold at beginning of year for 8000. Book value sold is 14000. So balance book value is 14000. On that 10%.


Suraj Lakhotia

Suraj Lakhotia

Admin

14-Oct-20

1)Balance book value is given after deducting depreciation and loss at sale right, I mean 14,000(Value at the end of year) is the value after deducting depreciation and loss at sale right. 2)I mean the furniture a/c(Ledger) also doesn't Tally.

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Thread Starter

G Aldrin

G Aldrin

CA Inter

11K+

14-Oct-20

And what impact does the dates have like Purchased and put to use at the last date of the year, Sold at the beginning of the year...


Thread Starter

G Aldrin

G Aldrin

CA Inter

11K+

14-Oct-20

Thread Starter

G Aldrin

And what impact does the dates have like Purchased and put to use at the last date of the year, Sold at the beginning of the year...

So if sold at beginning of year - no depreciation. Depreciation not yet provided.


Suraj Lakhotia

Suraj Lakhotia

Admin

14-Oct-20

Suraj Lakhotia Admin

So if sold at beginning of year - no depreciation. Depreciation not yet provided.

Thank You Sir, and what about purchased and put to use on the last day of the year.


Thread Starter

G Aldrin

G Aldrin

CA Inter

11K+

14-Oct-20

Thread Starter

G Aldrin

Why Furniture a/c didn't tally?

The balance given in question is before depreciation.


Suraj Lakhotia

Suraj Lakhotia

Admin

14-Oct-20

If purchased on last day no depreciation.


Suraj Lakhotia

Suraj Lakhotia

Admin

14-Oct-20

Thank you sir


Thread Starter

G Aldrin

G Aldrin

CA Inter

11K+

14-Oct-20

Suraj Lakhotia Admin

The balance given in question is before depreciation.

Sir, but how can we know if the closing balance is after charging depreciation or before charging depreciation.


Thread Starter

G Aldrin

G Aldrin

CA Inter

11K+

14-Oct-20

Thread Starter

G Aldrin

Sir, but how can we know if the closing balance is after charging depreciation or before charging depreciation.

Generally if it is mentioned that depreciation is to be provided or charge depreciation, the balance is before depreciation.


Suraj Lakhotia

Suraj Lakhotia

Admin

15-Oct-20

All the Best
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