Depreciation Test 11

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Depreciation Test 11

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Weekly Quiz Competition

Question 1
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Which of the following statements is TRUE?

A
Provision for doubtful debts represents the amount that cannot be collected

B
Cash balance on hand shows whether the business has earned Profit or Loss

C
Free samples received are business gains

D
The WDV of an assets depreciated on the reducing balance method can never become zero
Question 2
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Directions For Questions

The balance in accumulated depreciation account of a company at the beginning of year 2008-2009 was Rs. $$2,00,000$$, when the original cost of the assets amounted to Rs. $$10,00,000$$. The company charges $$10$$% depreciation on a SLM basis for all assets including those which have been either purchased or sold during the year. One such asset costing Rs. $$5,00,000$$ with accumulated depreciation as at the beginning of the year of RS. $$80,000$$ was disposed off during the year.

...view full instructions

Depreciation for the current year = ?

A
Rs. $$40,000$$

B
Rs. $$50,000$$

C
Rs. $$60,000$$

D
Rs. $$1,00,000$$

Question 3

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Directions For Questions

In the year 2014-2015 C Ltd. purchase a new machine and made the following payments in relation to it:

Particulars	Rs
Cost as per supplier's list	$$5,20,000$$
Agreed discount	$$50,000$$
Delivery charges	$$10,000$$
Erection charges	$$20,000$$
Annual maintenance charges	$$30,000$$
Additional components to increase capacity of machine	$$40,000$$
Annual insurance premium	$$5,000$$

...view full instructions

If depreciation is provided @ $$10$$% p.a. SLM, depreciation for 3rd year will be -

Rs. $$54,000$$

Rs. $$54,500$$

Rs. $$47,000$$

Rs. $$55,000$$

Question 4
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A company purchased plant for Rs. $$50,000$$. The useful life of the plant is $$10$$ years and the residual value is Rs. $$5,000$$. The management wants to depreciate it by straight line method. Rate of depreciation will be = ?

A
$$8$$%

B
$$9$$%

C
$$10$$%

D
None of the above
Question 5
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On 1.8.2012 K Ltd. bought four Matador Vans costing Rs. $$1,20,000$$ each. The company expected to fetch a scrap value of $$25$$% of the cost price of the vehicles after $$10$$ years. The vehicles were depreciated under the fixed instalment method upto 31.3.2015. The rate of depreciation charged upto 31.3.2015 = ?

A
$$10.0$$%

B
$$9.0$$%

C
$$8.5$$%

D
$$7.5$$%
Question 6
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On 1.1.2015, the Plant Account showed a balance of RS. $$80,000$$. Out of the above, a Plant whose book vale was Rs. $$10,000$$ on that date, was sold for Rs. $$6,000$$ on 1.4.2015. On 1.10.2015, the plant was purchased for Rs. $$20,000$$. Depreciation is charged at $$10$$ p.a on SLM basis and books of accounts are closed on 31st December each year. Balance of Plant on 31.12.2015 = ?

A
Rs. $$72,000$$

B
Rs. $$92,000$$

C
Rs. $$89,000$$

D
Rs. $$83,000$$
Question 7
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Equipment was purchased on 1st January 2012 for Rs. $$25,000$$ and is to be depreciated at $$30$$% based on reducing balance method. If the company closes its books of account on 31st March every year, what would be the net book value of the equipment as at 31st December, 2013?

A
Rs. $$12,250$$

B
Rs. $$10,000$$

C
Rs. $$17,750$$

D
Rs. $$12,545$$
Question 8
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Extract of trial balance of Mr.S on $$31-3-2015$$ is as follows.
Particulars Dr. Rs. Cr. Rs.
Furniture $$20,000$$ -
Provision for depreciation - $$2,000$$
Addition to furniture on $$31-1-2015$$ $$6,000$$ -
Repair to furniture $$1,000$$
Furniture is depreciated by $$10\%$$ p.a. on original cost. Furniture will be shown in balance sheet at Rs.

A
Rs. $$21,900$$

B
Rs. $$21,400$$

C
Rs. $$16,000$$

D
Rs. $$22,900$$
Question 9
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A boiler was purchased by a company for Rs.20 lakhs. After 2 years its cost came down to Rs.10 lakhs. The salvage value of the boiler is Rs.2 lakhs. On which cost the depreciation for the asset will be calculated in Straight Line method?

A
It will be calculated on the basis of its original cost of Rs.20 lakhs.

B
It will be calculated on the basis of Rs.18 lakhs.

C
It will be calculated on the basis of Rs.10 lakhs.

D
It will be calculated by taking the average of all three costs.

Solution

Straight line basis is a method of calculating depreciation and amortization. It is calculated by dividing the difference between an asset's cost and its expected salvage value by the number of years it is expected to be used. Hence, option (b) is correct.
Question 10
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An additional purchase was made for machine on 15.06.2009. Under straight line method ________.

A
depreciation will be changed from the date of purchase

B
depreciation will be charged from the beginning of the year

C
Both a & b

D
None of the above

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Particulars	Dr. Rs.	Cr. Rs.
Furniture	$$20,000$$	-
Provision for depreciation	-	$$2,000$$
Addition to furniture on $$31-1-2015$$	$$6,000$$	-
Repair to furniture	$$1,000$$

Depreciation Test 11

Result

Depreciation Test 11

Score

-

Rank

-

SHARING IS CARING

Question 1

Provision for doubtful debts represents the amount that cannot be collected

Cash balance on hand shows whether the business has earned Profit or Loss

Free samples received are business gains

The WDV of an assets depreciated on the reducing balance method can never become zero

Question 2

Rs. $$40,000$$

Rs. $$50,000$$

Rs. $$60,000$$

Rs. $$1,00,000$$

Question 3

Rs. $$54,000$$

Rs. $$54,500$$

Rs. $$47,000$$

Rs. $$55,000$$

Question 4

$$8$$%

$$9$$%

$$10$$%

None of the above

Question 5

$$10.0$$%

$$9.0$$%

$$8.5$$%

$$7.5$$%

Question 6

Rs. $$72,000$$

Rs. $$92,000$$

Rs. $$89,000$$

Rs. $$83,000$$

Question 7

Rs. $$12,250$$

Rs. $$10,000$$

Rs. $$17,750$$

Rs. $$12,545$$

Question 8

Rs. $$21,900$$

Rs. $$21,400$$

Rs. $$16,000$$

Rs. $$22,900$$

Question 9

It will be calculated on the basis of its original cost of Rs.20 lakhs.

It will be calculated on the basis of Rs.18 lakhs.

It will be calculated on the basis of Rs.10 lakhs.

It will be calculated by taking the average of all three costs.

Solution

Question 10

depreciation will be changed from the date of purchase

depreciation will be charged from the beginning of the year

Both a & b

None of the above

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