Depreciation Test 22

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Depreciation Test 22

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Weekly Quiz Competition

Question 1
1 / -0

A firm has a policy of charging depreciation on Plant and Machinery @20% under WDV method. Find the book value of the plant as on 31.03.09 if the same was purchased on 1.04.07 for Rs.50,000.

A
Rs.40,000

B
Rs.36,000

C
Rs.32,000

D
Rs.30,000

Solution
Question 2
1 / -0

A machinery was purchased on $$1-1-2013$$. It was delivered on $$1-4-2013$$. The installation was completed on $$1-7-2013$$. The trail run was completed on $$30-9-2013$$ and was made available for use on $$1-10-2013$$. The actual utilization started from $$1-12-2013$$. The effective period for calculation of depreciation for $$2013$$ is __________.

A
$$10$$ months

B
$$9$$ months

C
$$1$$ months

D
$$3$$ months

Solution

The machinery is available for use from 1-10-2013,
The actual utilisation of the machine from 1-12-2013
Machinery should be depreciated from the date of availability of the machine i.e. 1-10-2013
Hence, The effective period for calculation of depreciation for 2013 is 3 months
Question 3
1 / -0

On 1.1.06 Novel Industries pin-chased new office equipment for Rs. 150,000 with a working life of 10 years. The estimated scrap value at the end of 10 years is estimated to be Rs. 20,000. Find the depreciation for the 10th year under Straight-Line Method.

A
15,000

B
13,000

C
12,000

D
10,000

Solution
Question 4
1 / -0

A firm acquired machinery on 1st July 2019 at a cost of Rs 45,000 and spent Rs 5,000 for its installation. The firm writes off depreciation at 10% per annum on the diminishing balance method. The books are closed on 31 st March every year. Depreciation for the year ended 31st March 2020 & 31st March 2021 will be Rs_______& Rs________.

A
$$3,750, 5,000$$

B
$$4625, 3,750$$

C
$$3,750, 4,625$$

D
$$5000, 3,750$$

Solution

Depreciation at the end of the year:-
31st March 2012
(value of machinery will be cost of the machinery plus installation charges - 45,000 + 5,000)
= 50,000 x 10/100 x 9/12 (1st July 2011 to 31st march)
= 3,750.

31st March 2013 (depreciation for the full year)
= (50,000 - 3750) 46250 x 10/100
= 4,625.
Question 5
1 / -0

Original Cost = Rs. 1,00,000. Life = 5 years. Expected salvage value = Rs. 2,000
Rate of depreciation p.a.as per straight line method is _______.

A
20.0%

B
19.8%

C
19.6%

D
19.4%

Solution

Depreciation in SLM = cost of assets+Installation charges-scrap value/estimated useful life
=100000-2000/5
=98000/5
Annual depreciation=19600
Rate of depreciation = Annual depreciation *100/cost of assets
=19600*100/100000
=19.6%
Question 6
1 / -0

Y 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 WDV. Depreciation rate is 20%. Depreciation for 3rd year = ?

A
$$1,664$$

B
$$1,536$$

C
$$1,600$$

D
None of the above

Solution

Depreciation for 3rd year :-
= 8,320 x 20/100
= 1,664.

Working notes :-
1) Value of machinery :- 12,000 + 1,000
= 13,000
1st year depreciation :-
= 13,000 x 20/100
= 2,600
2nd year depreciation :-
= (13,000 - 2,600) 10,400 x 20/100
= 2,080

2) WDV of machinery at the beginning of 3rd year =
= 13,000 - 2,600 - 2080
= 8320.

Question 7

1 / -0

On the basis of the information given below answer the following question.
In the year 2014-15 C Ltd. purchased a new machine and made the following payments in relation to it:

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

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

Rs$$43,740$$

Rs$$44,145$$

Rs$$38,070$$

Rs$$44,550$$

Solution

Calculation of cost of the machinery:-

Cost as per supplier = 5,20,000

Add:- delivery charges = 10,000

erection charges = 20,000

Additional component to increase capacity of machine = 40,000

-------------------

= 5,90,000

Less:- Agreed discount = (50,000)

----------------------

Cost of the machinery = 5,40,000

WDV of machinery at the end of 2nd year (2016-17)

= 5,40,000 - 54,000 - 48,600 (Working notes)

= 4,37,400.

Depreciation for the 3rd year :-

= (4,86,000 - 48,600) 4,37,400 x 10/100

= 43,740.

Working notes. :-

Depreciation for the 1st year :-

= 5,40,000 x 10/100

= 54,000.

Depreciation for the 2nd year :-

= (5,40,000 - 54,000) 4,86,000 x 10/100

= 48,600.

Question 8
1 / -0

On Sept 01,2012,CAS Travels Ltd. bought four Metador van costing Rs. 2,40,000 each. The company expected to fetch a scrap value of 25% of the cost price of the vehicles after ten years. The vehicles were depreciated under the fixed installment method up to March 31,2014. With effect from April 01, 2014, the company decided to introduce the diminishing balance method of depreciation @ 20% p.a. instead of the fixed installment method. The company sold one of the vans at Rs. 70,000 on March 31, 2014. The rate of depreciation charged up to March 31, 2014 was __________ .

A
10.0%

B
9.0%

C
8.5%

D
7.5%

Solution
Question 9
1 / -0

On 1-4-2012 balance in plant account was Rs. 3,77,913. On 1-7-2012, purchased new machine for Rs.50,000 (installation expenses Rs.2,500). A sum of Rs. 30,000 was paid on the same date and balance Rs. 30,000 was paid on may 2013. company provides depreciation @15% p.a. on reducing balance method and close accounts on 31st March each year. Depreciation for the year ended 31-3-2013=?

A
Rs. 62,593

B
Rs. 64,562

C
Rs. 60,062

D
Rs. 61,543

Solution

Depreciation for the year 31.03.2013 = Existing machinery + New machinery
= 56,687 + 5,906
= RS-62,593.
Working notes:-
1) existing machinery :-
= RS-3,77,913 x 15/100
= RS-56,687.
2) New machinery :-
= 50,000 + 2,500 x 15/100 x 9/12 (July to march)
= RS-5,906
Question 10
1 / -0

A firm owns a fleet of vehicles acquired at a total cost of Rs$$4,80,000$$. Accumulated depreciation up to the beginning of the current year is Rs$$2,12,400$$. Vehicles are depreciated at $$25\%$$ p.a using the reducing balance method. The written down value of the vehicles by the end of the current year would be:-

A
$$Rs.2,67,600$$

B
$$Rs.66,900$$

C
$$Rs.1,47,600$$

D
$$Rs.2,00,700$$

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Depreciation Test 22

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Depreciation Test 22

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Question 1

Rs.40,000

Rs.36,000

Rs.32,000

Rs.30,000

Solution

Question 2

$$10$$ months

$$9$$ months

$$1$$ months

$$3$$ months

Solution

Question 3

15,000

13,000

12,000

10,000

Solution

Question 4

$$3,750, 5,000$$

$$4625, 3,750$$

$$3,750, 4,625$$

$$5000, 3,750$$

Solution

Question 5

20.0%

19.8%

19.6%

19.4%

Solution

Question 6

$$1,664$$

$$1,536$$

$$1,600$$

None of the above

Solution

Question 7

Rs$$43,740$$

Rs$$44,145$$

Rs$$38,070$$

Rs$$44,550$$

Solution

Question 8

10.0%

9.0%

8.5%

7.5%

Solution

Question 9

Rs. 62,593

Rs. 64,562

Rs. 60,062

Rs. 61,543

Solution

Question 10

$$Rs.2,67,600$$

$$Rs.66,900$$

$$Rs.1,47,600$$

$$Rs.2,00,700$$

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