The written down value of a plant is Rs. 60,000 (the original value being Rs. 1,00,000). It is sold for Rs. 1,20,000 during the current financial year. Which of the following is true in this regard?

The correct answer is: C. Capital profit = Rs. 20,000 and Revenue profit = Rs. 40,000

Capital profit is the difference between the sale price of an asset and its book value. In this case, the sale price is Rs. 1,20,000 and the book value is Rs. 60,000, so the capital profit is Rs. 60,000.

Revenue profit is the difference between the revenue from the sale of an asset and its cost. In this case, the revenue is Rs. 1,20,000 and the cost is Rs. 1,00,000, so the revenue profit is Rs. 20,000.

Therefore, the capital profit is Rs. 20,000 and the revenue profit is Rs. 40,000.

Here is a brief explanation of each option:

• Option A: Capital profit = Rs. 60,000. This is incorrect because the capital profit is the difference between the sale price of an asset and its book value, not its original value.
• Option B: Revenue profit = Rs. 60,000. This is incorrect because the revenue profit is the difference between the revenue from the sale of an asset and its cost, not its original value.
• Option C: Capital profit = Rs. 20,000 and Revenue profit = Rs. 40,000. This is correct because the capital profit is the difference between the sale price of an asset and its book value, and the revenue profit is the difference between the revenue from the sale of an asset and its cost.
• Option D: Capital profit = Rs. 1,20,000. This is incorrect because the capital profit is the difference between the sale price of an asset and its book value, not its original value.