A machine costs Rs. 300,000 and is depreciated at 10% of cost each year using the straight-line method. What is its carrying amount after three years, assuming no residual value?
Correct answer: C. Rs. 210,000
- A. Rs. 180,000
- B. Rs. 270,000
- C. Rs. 210,000
- D. Rs. 330,000
Explanation
Annual depreciation is 10% of Rs. 300,000, or Rs. 30,000. Three years produce accumulated depreciation of Rs. 90,000, leaving a carrying amount of Rs. 210,000.
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Financial statements present a business's financial performance and position through the income statement, statement of financial position, cash flow statement and changes in equity. Questions involve preparing and interpreting these statements, adjusting entries, depreciation, closing inventory, accrued and prepaid items, and distinguishing profit from cash flow.
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