Depreciation Test 6

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Depreciation Test 6

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Weekly Quiz Competition

Question 1
1 / -0

Gross book value of a group of asset is Rs. $$120,000$$ and total accumulated depreciation of Rs. $$24,000$$ and current depreciation of Rs. $$2000$$. The net book value of the asset is ___________.

A
$$94,000$$

B
$$96,000$$

C
$$98,000$$

D
$$1,00,000$$

Solution

Net book value of the asset = Gross book value - Total accumulated depreciation - Current depreciation
Net book value of the asset = Rs. 1,20,000 - Rs. 24,000 - Rs. 2,000 = Rs. 94,000
Question 2
1 / -0

Under which method of depreciation annual de-preciation remains constant.

A
Reducing Balance Method

B
Straight Line Method

C
Annuity Method

D
None

Solution

solution:
Under straight line method amount of depreciation remains constant for every year. Under this method, a fixed and equal amount of depreciation, calculated at a fixed percentage on the original cost of fixed deprciable asset is written off during each accounting period over the expected useful life of the asset.
hence the correct option: B
Question 3
1 / -0

The book value of an asset on 1-4-2006 is Rs. 1,80,000. The asset is sold on 31-12-2006 for Rs. 1,20,000. If the rate of depreciation is 10% on written down value. What is the profit and loss on sale of the asset?

A
Rs. 42,000

B
Rs. 46,500

C
Rs. 51,250

D
Rs. 60,000

Solution
Question 4
1 / -0

Under which method of depreciation annual depreciation charges bears a fixed $$\%$$ of the original depreciable value of the assets.

A
Sinking fund method

B
Sum of years digit method

C
Written down value method

D
Straight line method

Solution
Question 5
1 / -0

Depreciable amount of a fixed asset represents..........

A
Historical cost less residual value

B
Historical cost

C
Historical cost less cost of disposal

D
Book value less scrap value

Solution
Question 6
1 / -0

Under which method of depreciation annual depreciation charges bears a fixed % of book value of the assets

A
Sinking fund method

B
Sum of years digit method

C
Written down value method

D
Straightline method

Solution

Under Written down method of depreciation annual depreciation charges bears a fixed % of book value of the assets.
Question 7
1 / -0

The cost of a fixed asset which is to be depreciated every year is called

A
Depreciable cost

B
Purchase cost

C
Acquisition cost

D
Book value
Question 8
1 / -0

If a company follows the written down value method of depreciating machinery year after year, it is due to __________.

A
Comparability

B
Convenience

C
Consistency

D
All of the above

Solution

Option C is correct. In accounting, Consistency principle requires that a company's financial statements should follow same accounting principles, methods, procedures and practices from one accounting period to another. This allows the readers of the financial statements to make meaningful comparison. So, if a company follows same method of depreciation year after year, it is due to consistency principle.
Question 9
1 / -0

Under which method of, depreciation annul depreciation goes on decreasing.

A
Reducing balance method

B
Straight line method

C
Annuity method

D
None

Solution

Under Reducing balance method the amount of annual depreciation goes on decreasing because the depreciation is calculated on the reduced balance of the asset.
Reducing balance of asset= Opening balance of asset in the previous year (-) depreciation for the previous year.
Question 10
1 / -0

The cost of a machine is Rs. $$2,000$$. Two years later the book value is Rs. $$1,000$$. The straight-line percentage depreciation is _________.

A
$$50$$%

B
$$33-1/3$$%

C
$$25$$%

D
$$20$$%

Solution

Under straight line method of depreciation, an equal amount is written off every yesr during the working life of an asset so as to reduce the cost of thee asset to nil or its residual value at the end of its useful life.
Under this method, the amount of depreciation is constant throughout the useful life of the asset.
Hence, in the above question :
Cost of machine = Rs. 2000
Book value after 2 years = Rs. 1000
Depreciation for two years = Rs. 1000
Depreciation for 1 year = Rs 1000 /2 = Rs. 500
SLM depreciation rate = (Straight Line Depreciation/Cost of asset) * 100
SLM depreciation rate = (Rs.500/Rs. 2000) * 100
SLM depreciation rate = 25%

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Re-Attempt Weekly Quiz Competition

Depreciation Test 6

Result

Depreciation Test 6

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SHARING IS CARING

Question 1

$$94,000$$

$$96,000$$

$$98,000$$

$$1,00,000$$

Solution

Question 2

Reducing Balance Method

Straight Line Method

Annuity Method

None

Solution

Question 3

Rs. 42,000

Rs. 46,500

Rs. 51,250

Rs. 60,000

Solution

Question 4

Sinking fund method

Sum of years digit method

Written down value method

Straight line method

Solution

Question 5

Historical cost less residual value

Historical cost

Historical cost less cost of disposal

Book value less scrap value

Solution

Question 6

Sinking fund method

Sum of years digit method

Written down value method

Straightline method

Solution

Question 7

Depreciable cost

Purchase cost

Acquisition cost

Book value

Question 8

Comparability

Convenience

Consistency

All of the above

Solution

Question 9

Reducing balance method

Straight line method

Annuity method

None

Solution

Question 10

$$50$$%

$$33-1/3$$%

$$25$$%

$$20$$%

Solution

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