PRC-1 · Chapter 8 · Question 68 of 100
Kashif Ltd bought a computer for Rs. 120,000 on 1 July 2025. Life 5 years, RV Rs. 20,000. Suitable method is reducing balance (rate 30.12%), but accountant incorrectly applied straight line. Year-end is 31 Dec 2025. What adjustment is required to the depreciation expense?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Increase depreciation expense by Rs. 8,072
Explanation
Correct RB depreciation = 120,000 * 30.12% * 6/12 = 18,072. Incorrect SLM depreciation = (120,000 - 20,000) / 5 * 6/12 = 10,000. Adjustment = 18,072 - 10,000 = Increase by Rs. 8,072.
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