CAF-2 · Chapter 8 · Question 6 of 15
A motor vehicle costing Rs. 2,000,000 is used 60% for business and 40% for the personal use of a director. Normal depreciation is 15%. What will be the Written Down Value (WDV) carried forward to the second year?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) B) Rs. 1,700,000
Explanation
The WDV is computed on the basis that the asset has been solely used to derive business income. Total depreciation is Rs. 300,000 (15% of 2,000,000). Even though only 60% (Rs. 180,000) is allowed as a deduction against business income, the full Rs. 300,000 is deducted from the cost to find the WDV. Carried forward WDV = 2,000,000 - 300,000 = Rs. 1,700,000.
More Income from Business - Part Two MCQs
- Q8Alpha Ltd acquired a secret formula (an intangible) to be used in its business. The useful life of this intangible cannot be ascertained…
- Q9An entity incurred Rs. 800,000 on feasibility studies and trial production before the commencement of its commercial business operations…
- Q10Mr. Ahmed purchased a commercial shop for Rs. 6,000,000 to use as his business office. He paid the entire amount in physical cash. Under…
- Q11A company purchased a solar plant for Rs. 10,000,000. The Provincial Government voluntarily provided a non-taxable subsidy of Rs…
- Q12A company acquired machinery using a foreign currency loan. Before the loan was fully repaid, the exchange rate increased, increasing the…