alleryUnder straight line method, after full useful life the carrying amount equals:
AOriginal purchase cost
BTwice the residual amount
CEstimated residual value
DZero in all cases
Answer & Solution
Correct answer: C. Estimated residual value
1. SLM depreciates (Cost − Residual) over the useful life.
2. At end of useful life, depreciable amount is fully written off.
3. Net carrying amount = Cost − (Cost − Residual) = Residual value.
_Source: ICAI BoS Foundation Paper 1, Ch 5 "Depreciation & Amortisation", §3.1 ¶1_
Keep practising Depreciation and Amortisation
Browse all Depreciation and Amortisation questions for CA Foundation, or explore more Accounting topics.
Related questions
How does depreciation expense affect the reported net income?Depletion is most used in which group of industries?Depletion is the using up of natural resources by which activity?Cost depletion allocates the cost of a resource in proportion to what?Pooling of similar assets bought in one year helps tax systems to?Buildings are generally given what depreciable lives under tax systems?For tax depreciation, bare land generally receives?A tax system that allows a fixed percentage of cost each year is called?