Depreciation Test 14

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Depreciation Test 14

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Weekly Quiz Competition

Question 1
1 / -0

Under which of the following method depreciation charged declines?

A
Diminishing balance method

B
Sum of year digit method

C
Double decline method

D
All of the above

Solution

Diminishing Balance Method of Calculating Depreciation :- Under this method, the amount of depreciation is calculated as a fixed percentage of the reducing or diminishing value of the asset standing in the books at the beginning of the year, so as to bring down the book value of the asset to its residual value.

The sum of years' digits method is a form of accelerated depreciation that is based on the assumption that the productivity of the asset decreases with the passage of time. Under this method, a fraction is computed by dividing the remaining useful life of the asset on a particular date by the sum of the year's digits.

Double declining balance method is a form of an accelerated depreciation method in which the asset value is depreciated at twice the rate it is done in the straight-line method.
Question 2
1 / -0

An equipment was purchased on 1st January, 2012 for Rs. 25,000 & is to be depreciated at 30% based on WDV method. If the company closes its books of account on 31 st March every year. What would be the net book value of the equipment as at 31 st December 2013:

A
12,250

B
10,000

C
17,750

D
12,545

Solution

Value of Equipment as on $$1st Jan, 2012 = 25,000$$
Less: Depreciation for the year 2012(25,000 x 30%) $$= 7,500$$
$$= 17,500$$
Less: Depreciation for the year 2013(17,500 x 30%) $$= 5,250$$
Net Book Value of the Equipment $$ = 12,250$$
Question 3
1 / -0

A company purchased plant for 50,000. The useful life of the plant is 10 years and the residual value is 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

Solution

Depreciation = $$\frac{50,000-5,000}{10}= 4,500$$
Rate of depreciation= $$\frac{4,500}{50,000}X 100$$ = 9%
Question 4
1 / -0

The WDV of machine is Rs. 72,900, rate of depreciation @ 10%, period 3 years. Calculate the original cost of machinery.

A
72,900

B
80,000

C
1,20,000

D
1,00,000

Solution

Cost of machinery = $$\frac{72900}{( 1 -10)^{3}} *100 = 1,00,000$$
Question 5
1 / -0

The value of a fixed asset after deducting depreciation is known as its:

A
Book value

B
Market Value

C
Face Value

D
Realisable value

Solution

For assets, the book value is based on the original cost of the asset less any depreciation.
Question 6
1 / -0

The portion of the acquisition cost of the asset, yet to be allocated is known as ___________________.

A
Written Down Value

B
Accumulated Value

C
Realizable Value

D
Salvage Value

Solution

The write down value (WDV), is the "net book value of an asset computed by deducting the accumulated depreciation or amortization from the value shown in the account books (the book value)."
Question 7
1 / -0

Under _____ method depreciation is provided as a fixed percentage of the written down value of the asset.

A
Fixed instalment method.

B
Annuity method

C
Reducing balance method

D
All of the above

Solution

Reducing balance depreciation is a method of calculating depreciation whereby an asset is expensed as a set percentage each accounting period. Asset cost: the original value of the asset plus any additional costs required to get the asset.
Question 8
1 / -0

A manufacturer owns three machines - the first acquired on $$1.1.2011 for 1,10,000$$, the second on $$1.7.2013$$ for Rs$$90,000$$, and on the third on $$1.10.2015$$ for Rs$$1,30,000$$. He expects to use each machine for ten years and realize the scrap for $$10,000$$. Using the straight-line method what is his depreciation for the year ended $$31.12.2015$$?

A
$$33,000$$

B
$$21,000$$

C
$$30,000$$

D
$$12,000$$
Question 9
1 / -0

Z Ltd. acquired machinery on $$1st$$ January $$2011$$ at a cost of Rs$$72,000$$ and spent Rs.$$8,000$$ for its installation. The firm writes off depreciation at $$10\%$$ p.a on the original cost every year. The books are closed on $$31st$$ December every year. Depreciation for $$1st$$ & $$2nd$$ year as per fixed instalment method will be Rs.__________

A
$6,000, 6,000$$

B
$8,000, 8,000$$

C
$8,000, 7,200$$

D
$6,000, 8,000$$
Question 10
1 / -0

Z Ltd. purchased a machine on $$1.1.2012$$ for Rs$$12,000$$. Installation expenses were Rs$$1,000$$. Residual value after $$5$$ years Rs$$500$$. Depreciation is provided under SLM. Department rate is $$10\%$$ p.a Annual depreciation=?

A
$$1,700$$

B
$$1,300$$

C
$$2,100$$

D
$$2,500$$

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Re-Attempt Weekly Quiz Competition

Depreciation Test 14

Result

Depreciation Test 14

Score

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Rank

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SHARING IS CARING

Question 1

Diminishing balance method

Sum of year digit method

Double decline method

All of the above

Solution

Question 2

12,250

10,000

17,750

12,545

Solution

Question 3

8%

9%

10%

None of the above

Solution

Question 4

72,900

80,000

1,20,000

1,00,000

Solution

Question 5

Book value

Market Value

Face Value

Realisable value

Solution

Question 6

Written Down Value

Accumulated Value

Realizable Value

Salvage Value

Solution

Question 7

Fixed instalment method.

Annuity method

Reducing balance method

All of the above

Solution

Question 8

$$33,000$$

$$21,000$$

$$30,000$$

$$12,000$$

Question 9

$6,000, 6,000$$

$8,000, 8,000$$

$8,000, 7,200$$

$6,000, 8,000$$

Question 10

$$1,700$$

$$1,300$$

$$2,100$$

$$2,500$$

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