CAF-6 · Chapter 12 · Question 8 of 15
An entity purchases a customer list for Rs. 2,000,000. It expects to use the list to generate sales for the next 4 years, after which it will be obsolete. Assuming straight-line amortization, what is the carrying amount after 18 months?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Rs. 1,250,000
Explanation
Amortization per year = 2,000,000 / 4 = 500,000. Amortization for 18 months (1.5 years) = 500,000 * 1.5 = 750,000. Carrying amount = 2,000,000 - 750,000 = Rs. 1,250,000.
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