Depreciation Provisions and Reserves Test

Result

Depreciation Provisions and Reserves Test - 63

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

Carriage on purchase of fixed asset is __________ to cost of asset.

A
Added

B
Deducted

C
Not effect

D
None
Solution
Expenditure incurred upto the date at which the asset becomes ready to commence commercial production (i.e., production intended for sale or capitative consumption ) should bed capitalized and expenditure incurred after this cut off date should be treated as revenue expenditure.
Cost of assets includes :
Freight and in-transit Insurance
Import duties and other non refundable taxes
Cartage and carriage expenses
Site preparation costs
Installation cost, such as special foundation or plant
Professional fees for architects and engineers
Expenditure incurred on test runs and experimental production
Borrowing cost incurred upto the date at which substantially all the activities necessary to prepare the qualifying asset for its intended use are complete.
Therefore, carriage on purchase of fixed asset is added to cost of asset.
Question 2
1 / -0

Which of the following is not an advantage of Replacement value method of depreciation?

A
It reduces the net profit and hence results in reduction of tax burden.

B
The clerical cost would be considerably increased if prices of fixed assets are continually changing.

C
It gives due recognition to the inflationary economic conditions.

D
None of the above.

Solution

Replacement cost is simply define as the cost that entity has to bear in order to replace the asset with such resource that can provide the same benefit in pursuing the business objective under normal conditions.
In nutshell, by depreciating replacement cost we are trying to achieve fair basis of valuation of asset.
If the prices of fixed assets are continually changing, the clerical cost would considerably be high.
Question 3
1 / -0

Wages paid on installation of machinery is debited to ____________.

A
Wages Account

B
Cash Account

C
Machinery Account

D
None of the above
Solution
Expenditure incurred upto the date at which the asset becomes ready to commence commercial production (i.e., production intended for sale or capitative consumption ) should bed capitalized and expenditure incurred after this cut off date should be treated as revenue expenditure.
Cost of assets includes :
Freight and in-transit Insurance
Import duties and other non refundable taxes
Cartage and carriage expenses
Site preparation costs
Installation cost, such as special foundation or plant
Professional fees for architects and engineers
Expenditure incurred on test runs and experimental production
Borrowing cost incurred upto the date at which substantially all the activities necessary to prepare the qualifying asset for its intended use are complete.
Therefore, wages paid on installation of machinery is debited to Machinery Account.
Question 4
1 / -0

In case of mineral resources __________.

A
Depreciation is provided as per SLM

B
Depreciation is provided as per WDV

C
Depletion is charged

D
None of the Above

Solution

Depletion is similar to depreciation in that it is a cost recovery system for accounting and tax reporting. Depletion is the exhaustion of natural resources as a result of their removal. examples are oil, minerals, and timber etc.
Question 5
1 / -0

The principal factor in measurement of depreciation is/are __________.

A
total cost

B
residual value

C
useful life

D
all the three

Solution

Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life. Principle factor in measurement of depreciation are total cost of asset, useful life of asset, residual value of the asset.
Question 6
1 / -0

The term "___________" is used for the process of writing down long term investment in intangible.

A
Depreciation

B
Depletion

C
Amortization

D
Obsolescence

Solution

Amortisation is an accounting term that refers to the process of allocating the cost of an intangible asset over a period of time. It also refers to the repayment of loan principle over time.
Question 7
1 / -0

______________ is the amount of the acquisition cost to be allocated as depreciation over the total useful life of an asset.

A
historical cost

B
Book value

C
Depreciable value

D
Residual value

Solution

Depreciable value is allocation of the cost of a tangible asset over its useful life. Principle factor in measurement of depreciation are total cost of asset, useful life of the asset, residual value of the asset.
Question 8
1 / -0

An asset is subject to $$10\%$$ depreciation on reducing balance method. If the book value of the asset as on $$31.03.13$$ is Rs. $$45000$$. The Book value of the Asset as on $$31.03.15$$ will be ___________.

A
Rs. $$40,500$$

B
Rs. $$36,450$$

C
Rs. $$50,000$$

D
Rs. $$48,000$$

Solution

Rate of depreciation = 10% on WDV
The book value of the asset on 31.03.14 is Rs. 45,000
Book value of the asset as on 31.03.14 = Rs. 45,000 - (10% x Rs. 45,000) = Rs. 40,500
Book value of the asset as on 31.03.15 = Rs. 40,500 - (10% Rs. 40,500) = Rs. 36,450
Question 9
1 / -0

An asset is subject to $$10\%$$ depreciation on reducing balance method. If the book value of the asset as on $$31.03.14$$ is Rs. $$40500$$. The annual depreciation for the year $$2013-14$$ amounted to __________.

A
Rs. $$4,500$$

B
Rs. $$4,050$$

C
Rs. $$50,00$$

D
Rs. $$48,00$$

Solution

Book value on 31.03.14 = Rs. 40,500
Rate of depreciation = 10% on WDV
So, if 40,500 is 90% then how much will be the amount of annual depreciation on 31.03.13, i.e. 10% annual depreciation for the year 2013-14 = (Rs. 40,500 x 10)/90 = Rs. 4,500
Question 10
1 / -0

XYZ purchased a plant having estimated useful life of $$15$$ years, however after $$5$$ year the remaining life of the asset is revised to $$5$$ years. Rs. $$40,000$$ being the remaining depreciable amount will be charged/allocated over ____________.

A
$$5$$ years

B
$$10$$ years

C
immediately

D
charged to revaluation a/c

Solution

Where their is a revision of the estimated useful life of an asset, the unamortised depreciation amount should be charged over the revised remaining useful life.
Remaining depreciable amount after 5 yrs. = Rs. 40,000
Remaining life of asset revised to = 5 years
Hence, the remaining depreciable amount will be charged over 5 years.

User

Question Analysis

Correct -
Wrong -
Skipped -

My Perfomance

Score
-
out of -
Rank
-
out of -

Re-Attempt Weekly Quiz Competition

Depreciation Provisions and Reserves Test - 63

Result

Depreciation Provisions and Reserves Test - 63

Score

-

Rank

-

SHARING IS CARING

Question 1

Added

Deducted

Not effect

None

Solution

Question 2

It reduces the net profit and hence results in reduction of tax burden.

The clerical cost would be considerably increased if prices of fixed assets are continually changing.

It gives due recognition to the inflationary economic conditions.

None of the above.

Solution

Question 3

Wages Account

Cash Account

Machinery Account

None of the above

Solution

Question 4

Depreciation is provided as per SLM

Depreciation is provided as per WDV

Depletion is charged

None of the Above

Solution

Question 5

total cost

residual value

useful life

all the three

Solution

Question 6

Depreciation

Depletion

Amortization

Obsolescence

Solution

Question 7

historical cost

Book value

Depreciable value

Residual value

Solution

Question 8

Rs. $$40,500$$

Rs. $$36,450$$

Rs. $$50,000$$

Rs. $$48,000$$

Solution

Question 9

Rs. $$4,500$$

Rs. $$4,050$$

Rs. $$50,00$$

Rs. $$48,00$$

Solution

Question 10

$$5$$ years

$$10$$ years

immediately

charged to revaluation a/c

Solution

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.