If net investment is 80 crore and depreciation is 20 crore, what will gross investment be?
Answer and explanation
Correct answer: 100 crore
Rearrange the identity Net Investment = Gross Investment − Depreciation. It becomes Gross Investment = Net Investment + Depreciation. Thus, gross investment = 80 crore + 20 crore = 100 crore. The figure 60 crore results from subtraction, but gross investment must include both the net addition and the amount needed to replace capital consumed through depreciation.
Frequently asked questions
What is the correct answer to this question?
100 crore
Why is this the correct answer?
Rearrange the identity Net Investment = Gross Investment − Depreciation. It becomes Gross Investment = Net Investment + Depreciation. Thus, gross investment = 80 crore + 20 crore = 100 crore. The figure 60 crore results from subtraction, but gross investment must include both the net addition and the amount needed to replace capital consumed through depreciation.
Which subject and chapter does this question cover?
This is a Class 11 Accountancy question. Chapter: Depreciation, Provisions, and Reserves.
