Multiple choice

A machine was purchased two years ago for Rs. 2,00,000. It is depreciated at the rate of 20% p.a. by straight line method and presently its market value is Rs. 1,00,000. According to cost concept, it should be recorded in the books at

  1. Rs. 2,00,000

  2. Rs. 1,00,000

  3. Rs. 1,20,000

  4. Rs. 1,60,000

Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Cost of machine = Rs. 2,00,000 Depreciation for 2 years at the rate of 20% p.a. = Rs. 80,000 Thus, present value = Rs. 1,20,000 Market value should be ignored according to realisation concept.