Depreciation Test 9

Result

Depreciation Test 9

Score
-
out of -
Rank
-
out of -

TIME Taken - -

SHARING IS CARING

If our Website helped you a little, then kindly spread our voice using Social Networks. Spread our word to your readers, friends, teachers, students & all those close ones who deserve to know what you know now.

Weekly Quiz Competition

Question 1
1 / -0

Q 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, Closing balance of machinery account for 1st and 2nd year as per fixed instalment method will be Rs. _______

A
$$72,000$$, $$64,000$$

B
$$74,000$$, $$66,600$$

C
$$74,000$$, $$72,000$$

D
$$74,000$$, $$66,000$$
Question 2
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 and 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 3
1 / -0

Which of the following is/are disadvantage of fixed instalment method of charging depreciation?

A
The assumption that the asset shall be equally useful throughout its life seems to be illogical.

B
It does not take into account the effective utilization of the asset.

C
Depreciation remains constant under this method over the useful life of the asset, hence true financial results cannot be shown by this method if use of the asset differs from year to year.

D
All of the above.

Solution

All of the above are disadvantages of the Straight line Method.
Question 4
1 / -0

A manufacturer owns three machines - the first acquired on 1.1.2011 for Rs. $$1,10,000$$, the second on 1,7,2013 for Rs.$$90,000$$, and 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 Rs. $$10,000$$. Using the straight-lie 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 5
1 / -0

Under the diminishing balance method of providing depreciation, depreciation is charged__________.

A
at fixed rate on the reducing balance every year

B
at reducing rate on the fixed amount every year

C
at reducing rate on the reducing balance every year

D
none of the above

Solution

Option A is the correct one.
Under Reducing balance method, the value of the asset never reduces to zero. Depreciation is charged at a fixed percentage on the book value of the asset. As the book value reduces every year, it is also known as the Reducing Balance Method or Written-down Value Method.
Question 6
1 / -0

Which of the following is/are advantage of Reducing balance method/WDV method?

A
Under this method it is easy to calculate depreciation rate.

B
Income tax authorities do not accept this method.

C
The efficiency and usefulness is more in early years so depreciation amount is also more in early years and goes on diminishing year to year.

D
All of the above.
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

Under the reducing balance method, the amount of depreciation is calculated by applying a fixed percentage on the written down value of the asset each year. In this way, the amount of depreciation each year is less than the amount provided for in the previous year. This is because the book value used to compute the depreciation expense is continually reduced from year to year.
Therefore, C is the correct option.
Question 8
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

Purchase Price of machine = 20,00,000
Installation charges = 5,00,000
Total cost of machine = 25,00,000
Depreciation = 25,00,000*10/100
= 2,50,000.
Question 9
1 / -0

Original cost = Rs. $$1,26,000$$. Salvage value $$=6,000$$. Useful Life $$=6$$ years. Annual depreciation under SLM = ?

A
Rs. $$21,000$$

B
Rs. $$20,000$$

C
Rs $$15,000$$

D
Rs. $$14,000$$

Solution

Calculation of depreciation under SLM =
Original cost - Salvage Value / Useful Life =
126000 - 6000 / 6 = Rs 20000
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. Depreciation rate is $$10$$% p.a Annual depreciation = ?

A
$$1,700$$

B
$$1,300$$

C
$$2,100$$

D
$$2,500$$

User

Question Analysis

Correct -
Wrong -
Skipped -

My Perfomance

Score
-
out of -
Rank
-
out of -

Re-Attempt Weekly Quiz Competition

Depreciation Test 9

Result

Depreciation Test 9

Score

-

Rank

-

SHARING IS CARING

Question 1

$$72,000$$, $$64,000$$

$$74,000$$, $$66,600$$

$$74,000$$, $$72,000$$

$$74,000$$, $$66,000$$

Question 2

$$6,000$$,$$6,000$$

$$8,000$$, $$8,000$$

$$8,000$$, $$7,200$$

$$6,000$$, $$8,000$$

Question 3

The assumption that the asset shall be equally useful throughout its life seems to be illogical.

It does not take into account the effective utilization of the asset.

Depreciation remains constant under this method over the useful life of the asset, hence true financial results cannot be shown by this method if use of the asset differs from year to year.

All of the above.

Solution

Question 4

$$33,000$$

$$21,000$$

$$30,000$$

$$12,000$$

Question 5

at fixed rate on the reducing balance every year

at reducing rate on the fixed amount every year

at reducing rate on the reducing balance every year

none of the above

Solution

Question 6

Under this method it is easy to calculate depreciation rate.

Income tax authorities do not accept this method.

The efficiency and usefulness is more in early years so depreciation amount is also more in early years and goes on diminishing year to year.

All of the above.

Question 7

Fixed instalment method

Annuity method

Reducing balance method

All of the above

Solution

Question 8

$$1,50,000$$

$$2,50,000$$

$$2,00,000$$

$$50,000$$

Solution

Question 9

Rs. $$21,000$$

Rs. $$20,000$$

Rs $$15,000$$

Rs. $$14,000$$

Solution

Question 10

$$1,700$$

$$1,300$$

$$2,100$$

$$2,500$$

User

Question Analysis

My Perfomance

Score

-

Rank

-

Results Announcement on: coming Monday

Stay Tuned: We’ll update you on your result via email or SMS.