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Depreciation Provisions and Reserves Test - 31

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Depreciation Provisions and Reserves Test - 31
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  • Question 1
    1 / -0
    ABC Industries Ltd. purchased a new Machinery on 1.1.04 for Rs.275,000 and spent Rs.25,000 on its installation.The machine is subject to 10% depreciation on the original cost.The company sold the Machinery on 31.12.14 for Rs.145,000. Find the accumulated depreciation on the machine as on 31.12.14
    Solution

  • Question 2
    1 / -0
    Under which method of, depreciation annul depreciation goes on decreasing.
    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 3
    1 / -0
    A change in depreciation method under AS 6 is treated as __
    Solution
    A change in depreciation method under AS 6 is treated as change in accounting policy.
    Depreciation is a decrease in the value of the fixed assets due to wear and tear, obsolescence and passage of time.
    Depreciation is charged only on the fixed Tangible Assets.
  • Question 4
    1 / -0
    Which of the following is a non-cash expenses
    Solution
    Only Depreciation is a non cash expense as there is no cash outflow while charged depreciation in the books of accounts.
  • Question 5
    1 / -0
    Which of these expenses will be debited to concerned fixed asset A/c
    Solution
    All those expenses are incurred on the asset till it is put to use are added to the cost of the fixed asset.
    Therefore, Installation expenses, Freight and Insurance expense and Duties and Statutory levies will are added to the cost of fixed assets.
  • Question 6
    1 / -0
    Allocation of the cost of a fixed assets over its useful life is called ___________.
    Solution
    Allocation of the cost of fixed assets over their useful life is called depreciation.
    Depreciation is a decrease in the value of the fixed assets due to wear and tear, obsolescence and passage of time.
    Depreciation is charged only on the fixed Tangible Assets.
  • Question 7
    1 / -0
    A firm has a policy of charging depreciation on Plant and Machinery @20% under WDV method. If the value of Plant a Machinery was Rs. 32000 on 31.03.09 find the original cost of the plant if the same purchased on 1.04.07
  • Question 8
    1 / -0
    Depreciable amount of a fixed asset represents..........
    Solution

  • Question 9
    1 / -0
    Which of these items will not be capitalized along with the Asset.
    Solution
    Annual repair and maintenance are recurring expense therefore, it is a revenue expense.
    Revenue Expenses are not capitalized.
  • Question 10
    1 / -0
    The cost of a fixed asset which is to be depreciated every year is called
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