If both gross investment and depreciation are 75 crore, what will net investment be?
Answer and explanation
Correct answer: Zero
Use Net Investment = Gross Investment − Depreciation. Since both values are 75 crore, the calculation is 75 − 75 = 0 crore. Gross investment exactly replaces the capital consumed during the year, so the capital stock receives no net addition. Adding the figures gives an incorrect 150 crore, and depreciation is not an additional negative amount after the subtraction.
Frequently asked questions
What is the correct answer to this question?
Zero
Why is this the correct answer?
Use Net Investment = Gross Investment − Depreciation. Since both values are 75 crore, the calculation is 75 − 75 = 0 crore. Gross investment exactly replaces the capital consumed during the year, so the capital stock receives no net addition. Adding the figures gives an incorrect 150 crore, and depreciation is not an additional negative amount after the subtraction.
Which subject and chapter does this question cover?
This is a Class 11 Accountancy question. Chapter: Depreciation, Provisions, and Reserves.
