Depreciation Test 16

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Depreciation Test 16

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Question 1
1 / -0

Original Cost = Rs$$1,00,000$$. Life = $$5$$ years. Expected salvage value = Rs$$2,000$$. What will be the rate of depreciation p.a?

A
$$20.0\%$$

B
$$19.8\%$$

C
$$19.6\%$$

D
$$19.4\%$$

Solution

Depreciation = $$\frac{1,00,000 - 2,000}{5} = 19,600$$;
Rate of depreciation = $$\frac{19,600 \times 100}{1,00,000} = 19.6\%$$
Question 2
1 / -0

A Ltd.acquired a machine on $$1st$$ January, $$2010$$ at a cost of Rs$$14,000$$ and spent Rs$$1,000$$ on its installation. The firm writes off depreciation at $$10\%$$ p.a of the original cost every year. The books are closed on $$31st$$ December every year. The books are closed on $$31st$$ December every year. After $$3$$ years machine sold for Rs$$9,000$$. Profit/Loss on sale = ?

A
Profit-Rs$$1,500$$

B
Loss - Rs$$1,500$$

C
Profit - Rs$$800$$

D
Loss - Rs$$800$$
Question 3
1 / -0

N.Ltd, purchased machine for Rs 1,00,000 on 1.1.2012. Installation expenses were Rs 10,000. Life of the asset is 5 years at the end of which asset can be sold at Rs 5,000. Depreciation rate is 15% on WDV. Depreciation for 4th year = Rs______?______.

A
$$9,212$$

B
$$9,673$$

C
$$10,594$$

D
$$10,133$$

Solution

Depreciation for 4th year :-
= 67553.75 x 15/100
= 10,133.

Working notes :-
1) Value of machinery = 1,00,000 + 10,000
= 1,10,000.
1st year depreciation :-
= 1,10,000 x 15/100
= 16,500.
2nd year depreciation :-
= (1,10,000 - 16,500) 93,500 x 15/100
= 14,025
3rd year depreciation :-
= (93500 - 14,025) 79,475 x 15/100
= 11,921.25.

2) WDV of machinery at the beginning of 4th year =
= 1,10,000 - 16,500 - 14,025 - 11,921,25
= 67,553.75.
Question 4
1 / -0

Machinery costing Rs$$20,00,000$$ was purchased on $$1.4.2012$$. The installation charges amounting Rs$$5,00,000$$ were incurred. The depreciation at $$10\%$$ p.a. on straight line method for the year ended $$31st$$ March, $$2013$$ will be ___________________.

A
$$1,50,000$$

B
$$2,50,000$$

C
$$2,00,000$$

D
$$50,000$$

Solution

machinery cost Rs.20,00,000 + 5,00,000 installment
= 2,500,000
=2,500,000 x 10% =2,50,000
Question 5
1 / -0

Consider the following information:
Rate of depreciation under the written down method = $$20\%$$; Original cost of the asset = Rs$$1,00,000$$; Residual value of the asset at the end of useful life = Rs.$$40,960$$.
Estimated useful life of the asset = ?

A
$$4$$ years

B
$$5$$ years

C
$$6$$ years

D
$$7$$ year
Question 6
1 / -0

S.Ltd. acquired a machine on 1st January 2010 at a cost of Rs 1,40,000 and spent Rs 10,000 on its installation. The firm writes off depreciation at 15% on WDV. The books are closed on 31st December every year. After 3 years machine sold for Rs 87,000. Profit Loss on sale =?

A
Profit - Rs$$1,023$$

B
Loss-$$1,023$$

C
Profit - Rs$$5,119$$

D
Loss - Rs$$5,119$$

Solution

Profit/loss = Sales value - WDV of machinery
= 87,000 - 92,119.
= RS-5,119

Working notes :-
Depreciation for 1st year(WDV method)
= (1,40,000 + 10,000) 1,50,000 x 15/100
= RS-22,500
Depreciation for 2nd year(WDV method)
= (1,50,000 - 22,500) 1,27,500 x 15/100
= RS-19,125.
Depreciation for 3rd year(WDV method)
= (1,27,500 - 19,125) 1.08,375 x 15/100
= RS-16,256.

WDV on 31st December 2013
= Cost of machinery - depreciation (For 3 years)
= 1,50,000 - (22,500 + 19,125 + 16,256)
= RS-92,119.
Question 7
1 / -0

Depreciation amount is the __________________.

A
Difference between historical cost and the market value of an asset

B
Historical cost less estimated salvage value

C
Historical cost less depreciation till date

D
None of these

Solution

Fixed assets are shown in the Balance sheet at Historical cost less depreciation. Depreciation Amount is the historical cost less salvage value of the asset. Depreciation is apportioning the cost of the asset by writing it off over the life of the asset. It is also used to record the decline in the value of the asset due to the passage of time, wear and tear etc.
Question 8
1 / -0

On $$1.1.2014$$, the Plant Account showed a balance of Rs.$$80,000$$. Out of the above, a Plant whose book value was Rs$$10,000$$ on that date, was sold for Rs$$6,000$$ on $$1.4.2015$$. On $$1.10.2015$$, the plant was purchases 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 $$31.3.2015$$=?

A
Rs.$$72,000$$

B
Rs.$$92,000$$

C
Rs.$$75,500$$

D
Rs.$$83,000$$
Question 9
1 / -0

A Company purchased plant for Rs. 50000. The useful life of the plant is 10 years and the residual value is Rs. 5000. The management wants to depreciate it by straight line method. What will be the rate of depreciation?

A
$$8\%$$

B
$$9\%$$

C
$$10\%$$

D
None of the above

Solution

As per question
Cost of Plant = Rs 50,000
Useful life = 10 years
Residual value = Rs 5000
Depreciation = Cost-Residual value/Estimated useful life
=50,000-5,000/10
=45000/10
=4500

Also,
rate of depreciation = Annual depreciation/cost of plant x 100
= 4500/50,000 x 100
= 9%
Question 10
1 / -0

The written down value of machine on 31st March 2013 is Rs 72,900. The machine was purchased on 1st April, 2010. Depreciation is charged @ 10 % p.a by diminishing balance method. The cost price of the machine = ?

A
Rs$$1,00,000$$

B
Rs$$90,000$$

C
Rs$$81,000$$

D
Rs$$72,000$$

Solution

WDV on 31st march 2013 = RS-72900 x 100/90
= RS-81,000
WDV on 31st march 2012 = RS-81,000 x 100/90
= RS-90,000.
Value on 1st April 2013 = RS-90,000 x 100/90
= RS-1,00,000.

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Depreciation Test 16

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Depreciation Test 16

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Question 1

$$20.0\%$$

$$19.8\%$$

$$19.6\%$$

$$19.4\%$$

Solution

Question 2

Profit-Rs$$1,500$$

Loss - Rs$$1,500$$

Profit - Rs$$800$$

Loss - Rs$$800$$

Question 3

$$9,212$$

$$9,673$$

$$10,594$$

$$10,133$$

Solution

Question 4

$$1,50,000$$

$$2,50,000$$

$$2,00,000$$

$$50,000$$

Solution

Question 5

$$4$$ years

$$5$$ years

$$6$$ years

$$7$$ year

Question 6

Profit - Rs$$1,023$$

Loss-$$1,023$$

Profit - Rs$$5,119$$

Loss - Rs$$5,119$$

Solution

Question 7

Difference between historical cost and the market value of an asset

Historical cost less estimated salvage value

Historical cost less depreciation till date

None of these

Solution

Question 8

Rs.$$72,000$$

Rs.$$92,000$$

Rs.$$75,500$$

Rs.$$83,000$$

Question 9

$$8\%$$

$$9\%$$

$$10\%$$

None of the above

Solution

Question 10

Rs$$1,00,000$$

Rs$$90,000$$

Rs$$81,000$$

Rs$$72,000$$

Solution

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