The cost of a fixed asset includes all amounts incurred to acquire the asset and any amounts that can be directly attributable to bringing the asset into working condition.
Directly attributable costs may include:
– Delivery costs
– Costs associated with acquiring the asset such as stamp duty and import duties
– Costs of preparing the site for installation of the asset
– Professional fees, such as legal fees and architects’ fees
Here A second hand car is purchased for Rs. 10,000.00 the amount of Rs. 1,000.00 is spent on its repairs, Rs. 500.00 is incurred to get the car registered in owner’s name and Rs. 1,200.00 is paid as dealer’s commission.
The amount debited to the car account = purchase price + repair + registration charges + dealers commission = 10,000 + 1,000 + 500 + 1,200 = Rs. 12,700.

A company cannot issue irredeemable preference shares.

Interest on calls in arrear is charged at 10% as per Table F under Companies Act, 2013.

Purchase cost = 10,000
Add: repairing expenses = 1,000
Add: miscellaneous expenses = 500
Total cost = 11,500
Selling price = x (say)
Margin = 20% of x = 0.2x
Cost = x – 0.2x = 0.8x = 11,500
or x = Rs. 14,375.

In financial accounting, every single event occurring in monetary terms is recorded. Sometimes, it just so happens that some events are either not recorded or it is recorded in the wrong head of account or wrong figure is recorded in the correct head of account. Whatever the reason may be, there is always a chance of error in the books of accounts. These errors in accounting require rectification. When there is a difference in a trial balance a suspense account is opened with the amount of the difference so that the trial balance agrees (pending the discovery and correction of the errors causing the difference).
Here new machine was purchased for Rs. 1,00,000 but the amount was wrongly posted to furniture account as Rs. 10,000 and cash received from customers Rs. 11,200 was omitted to be posted in the ledger. The fixed asset account is undercasted by 1,00,000 – 10,000 = Rs. 90,000. And since cash received from customers 11200 was omitted to be posted so the asset side is undercasted by Rs.11200.
Thus the difference in trial balance due to such errors will be 90,000 – 11,200 = Rs. 78,800.

A trial balance is a list of all the General ledger accounts (both revenue and capital) contained in the ledger of a business. This list will contain the name of the nominal ledger account and the value of that nominal ledger account. The value of the nominal ledger will hold either a debit balance value or a credit balance value. The debit balance values will be listed in the debit column of the trial balance and the credit value balance will be listed in the credit column. The purpose of a trial balance is to prove that the value of all the debit value balances is equal the total of all the credit value balances.

Under WDV method, depreciation is charged at a fixed rate every year, on the reducing balance. A certain percentage is applied to the previous year’s book value, to arrive at the current year’s depreciation/ book value, which show a declining balance, weighted for earlier years, and lower and lower for later
years, as the asset grows older.

Conservatism will be violated if we count the way given in the question.

Conservatism has been followed in the given case.