Question

9.
A purchased a car for Rs. 10,00,000 in 2011, the market value goes down to
Rs.7,00,000 in 2012, the accounting effects would be -
(a) It should be recorded at gross value of Rs. 10,00,000 in 2011 and 2012 as
well due to Cost Concept
(b) It should be recorded at Rs. 10,00,000 in 2011 and Rs. 7,00,000 in 2012
due to Market Value Concept
(c) Either (a) or (b)
(d) Neither (a) or (b)​

Answer 1

Answer:

It should be recorded at gross value of Rs. 10,00,000 in 2011 and 2012 as

well due to Cost Concept

(b) It should be recorded at Rs. 10,00,000 in 2011 and Rs. 7,00,000 in 2012

due to Market Value Concept

(c) Either (a) or (b)

Answer 2

As per the question given,

The correct answer is b) It should be recorded at Rs. 10,00,000 in 2011 and Rs. 7,00,000 in 2012 due to Market Value Concept.

The market value concept states that the value of an asset should be recorded at its fair market value, which is the price that could be obtained by selling the asset in an open market.

Since the market value of the car has gone down from Rs. 10,00,000 in 2011 to Rs. 7,00,000 in 2012, the accounting records should reflect the decrease in market value, and the car should be recorded at Rs. 10,00,000 in 2011 and Rs. 7,00,000 in 2012.

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