PRC-1 · Chapter 8 · Question 71 of 100
A company purchased land (Rs. 150,000) and building (Rs. 250,000). A junior accountant mistakenly charged 10% SLM depreciation on the entire Rs. 400,000. How should this error be corrected?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Debit Accumulated Depreciation Rs. 15,000, Credit Depreciation Expense Rs. 15,000
Explanation
Land is not depreciable. Depreciation was charged on 400k (40k) instead of 250k (25k). Depreciation is overstated by 15,000. The correction reverses this: Debit Accumulated Depreciation 15k, Credit Depreciation Expense 15k.
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