Multiple choice

Consider the following data of Sky Ltd. Cost of machinery purchased on 1 - 4 - 08 : 10, 00, 000 Installation charges : 1, 00, 000 Market value as on 31 - 3 - 09 : 12, 00, 000 While finalising the annual accounts, the machinery should be valued at

  1. Rs. 10, 00, 000

  2. Rs. 11, 00, 000

  3. Rs. 12, 00, 000

  4. Rs. 15, 00, 000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Machinery should be valued at historical cost, which includes purchase price plus installation charges. Market value is irrelevant for accounting purposes. Rs. 11,00,000 (10,00,000 + 1,00,000) represents the actual cost incurred.

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