Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

XYZ associates purchased a new plant for Rs.500000 and spent Rs.40,000 on its erection and commissioning. However the amount of Rs.40,000 being erection commissioning

 

XYZ associates purchased a new plant for Rs.500000 and spent Rs.40,000 on its erection and commissioning. However the amount of Rs.40,000 being erection commissioning expenses was debited to profit and loss A/c as a part of miscellaneous expenses. The plant is subject to depreciation at 15% p.a. What is the net effect of this transaction on profit and loss of the firm? A profit overstated by Rs.6,000 B C D profit understand by Rs.34,000 no effect on profit profit reduced by Rs.40,000.

Step by Step Solution

3.43 Rating (150 Votes )

There are 3 Steps involved in it

Step: 1

D profit reduced by Rs 40 000 Dep reciation expense for the year 500 000 40 000 0 15 ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting

Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella

2nd edition

134730372, 134730370, 978-0134730370

More Books

Students also viewed these Accounting questions

Question

How is the right-of-use asset measured?

Answered: 1 week ago