Depreciation Provisions and Reserves Test

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Depreciation Provisions and Reserves Test - 51

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Weekly Quiz Competition

Question 1
1 / -0

Which of the following method is applicable in case of wasting assets, i.e.,mines, quarries, oil well etc.?

A
Inventory system of depreciation

B
Machine hour rate

C
Sum of years digit

D
Depletion Method

Solution

Depletion is a periodic charge to expense for the use of natural resources. Thus, it is used in situations of items such as oil reserves, coal deposits, or gravel pits.
Question 2
1 / -0

The book value of an asset is defined as -

A
Cost minus salvage value

B
Cost minus accumulated depreciation

C
Cost minus salvage value minus accumulated depreciation.

D
Estimated fair market value.

Solution

Book value refers to the 'carrying value' of the asset in the balance sheet as on date.
Depreciation is a charge against the asset over a period of time.
To arrive at 'book value' of asset, accumulated depreciation has to be deducted from the cost, this gives a true and fair view of balance sheet which comprises of 'Assets' and 'Liabilities'.
Question 3
1 / -0

A manufacturer owns three machines - the first acquired on $$1.1.2011 for 1,10,000$$, the second on $$1.7.2013$$ for Rs$$90,000$$, and on 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 $$10,000$$. Using the straight-line 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 4
1 / -0

Which of the following is odd one?

A
Amortization

B
Capitalization

C
Depletion

D
Depreciation

Solution

Amortization is the process of incrementally charging the cost of an asset to with charging intangible assets to expense over time, and depreciation is associated with tangible assets. Similarly, depletion is associated with charging the cost of natural resources such as timber, minerals, and oil from the earth. A capitalized cost is recognized as part of a fixed asset, rather than being charged to expense in the period incurred.
Question 5
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 $$1st$$ & $$2nd$$ 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 6
1 / -0

Original cost = Rs$$12,00,000$$. Salvage value = Rs$$2,00,000$$. Useful Life = $$10$$ years. Annual depeciation = ? & rate of depreciation = ?

A
$$Rs1,00,000 & 10\%$$

B
$$Rs1,00,000 & 8.33\%$$

C
$$Rs1,20,000 & 12\%$$

D
$$Rs1,20,000 & 8.33\%$$
Question 7
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. Department rate is $$10\%$$ p.a Annual depreciation=?

A
$$1,700$$

B
$$1,300$$

C
$$2,100$$

D
$$2,500$$
Question 8
1 / -0

N.Ltd. purchase Machinery for Rs$$10,00,000$$ on $$1.1.2012$$. Installation expenses were Rs$$50,000$$. Life of the asset is $$6$$ years at the end of which asset can be sold at Rs$$30,000$$. Annual depreciation under straight line method will be =?

A
$$1,80,000$$

B
$$1,66,667$$

C
$$1,70,000$$

D
$$1,71,667$$
Question 9
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 10
1 / -0

Original cost = Rs$$88,200$$. Salvage value = $$4,200$$. Useful Life = $$3$$ years. Depreciation rate = ?

A
$$33.333\%$$

B
$$31.746\%$$

C
$$34.921\%$$

D
None of the above

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Re-Attempt Weekly Quiz Competition

Depreciation Provisions and Reserves Test - 51

Result

Depreciation Provisions and Reserves Test - 51

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Rank

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SHARING IS CARING

Question 1

Inventory system of depreciation

Machine hour rate

Sum of years digit

Depletion Method

Solution

Question 2

Cost minus salvage value

Cost minus accumulated depreciation

Cost minus salvage value minus accumulated depreciation.

Estimated fair market value.

Solution

Question 3

$$33,000$$

$$21,000$$

$$30,000$$

$$12,000$$

Question 4

Amortization

Capitalization

Depletion

Depreciation

Solution

Question 5

$6,000, 6,000$$

$8,000, 8,000$$

$8,000, 7,200$$

$6,000, 8,000$$

Question 6

$$Rs1,00,000 & 10\%$$

$$Rs1,00,000 & 8.33\%$$

$$Rs1,20,000 & 12\%$$

$$Rs1,20,000 & 8.33\%$$

Question 7

$$1,700$$

$$1,300$$

$$2,100$$

$$2,500$$

Question 8

$$1,80,000$$

$$1,66,667$$

$$1,70,000$$

$$1,71,667$$

Question 9

$$1,50,000$$

$$2,50,000$$

$$2,00,000$$

$$50,000$$

Solution

Question 10

$$33.333\%$$

$$31.746\%$$

$$34.921\%$$

None of the above

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