Concept and Accounting of Depreciation 0 Concept and Accounting of Depreciation 1 / 30 Q.30 Under __________ method, depreciation is calculated on the original cost of an asset at the end of each year. FIM RBM Depletion None 2 / 30 Q.29 Wages paid for installation of machinery should be debited to _______ account. P & L A/c Bank A/c Machinery A/c Wages A/c 3 / 30 Q.28 Under reducing balance method of depreciation is charged on __________. constant WDV Original cost None of theabove 4 / 30 Q.27 Under _________ method, depreciation is calculated on written down value. RBM SLM Depletion Change in method 5 / 30 Q.26 Under fixed installment method of depreciation, depreciation is charged on _______ asset. WDV Cost Original cost of None of theabove 6 / 30 Q.25 Depreciation is charged on ___________ asset. Intangible Tangible Fixed Current 7 / 30 Q.24 In fixed installment system the amount of depreciation is __________ every year. Non-constant Constant Increases Decreases 8 / 30 Q.23 Depreciation account is a ___________ account. Nominal Personal Real Impersonal 9 / 30 Q.22 Under __________ method, depreciation is calculated on the reducing value of an asset in each successive year. FIM SLM OCM RBM 10 / 30 Q.21 Fixed installment method of depreciation is also known as _________. WDV RBM SLM Depletion 11 / 30 Q.20 Under F.I.M. value of asset becomes ______ at the end of its useful life. negative Zero positive all of the above 12 / 30 Q.19 The physical wear and tear in an asset is called ________. Depreciation Depletion Depretium None of the above 13 / 30 Q.18 By the amount of depreciation, the value of asset _________. Increases Zero Becomes constant Decreases 14 / 30 Q.17 Depreciation = Cost of asset less scrap value divided by Estimated working _______ of assets. Scrap value WDV Life Market value 15 / 30 Q.16 The amount of depreciation goes on decreasing every year under the __________ method of depreciation. FLM RBM SLM OCM 16 / 30 Q.15 Under the __________ system of depreciation, the amount of depreciation does not change RBM Change in method SLM none 17 / 30 Q.14 Gradual and permanent decrease in the value of asset is known as ___________. Loss Depletion WDV Depreciation 18 / 30 Q.13 Under ____________ system, the amount of depreciation remains constant every year. RBM Depletion FIM Change in method 19 / 30 Q.12 Balance of depreciation account is transferred to __________ account. Machinery A/c P & L A/c Depreciation A/c Cash / Bank A/c 20 / 30 Q.11 Under ______ system, amount of depreciation amount changes every year. RBM FIM Depletion Provision for dep. 21 / 30 Q.10 Original cost = Rs.1,26,000: Salvage value=6,000:. If unit produced in 2nd year was 5,000 & total estimated production 50,000 Depreciation for the 2nd year 10,800 11,340 12,600 12,000 22 / 30 Q.9 On 1st Jan 2001 Tushart Ltd purchased a machine for Rs.20,000 & provided depreciation @ 10 % .At the end of 2004 the company decided to change the method of depreciation from WDV of SLM retrospectively ,the rate of depreciation remaining the same. On account of changed method of depreciation short depreciation to be provided Rs.580 short depreciation to be provided Rs.1,160 Excess depreciation to be provided Rs.580 Excess depreciation to be provided Rs.290 23 / 30 Q.8 Date of purchase of machine 1.04.20X4 . Cost Rs.12,00,000. Rate of depreciation : 10% p.a. on WDV . ON 1.10.2006. A part of machinery was purchased on 1.4.2004 for Rs.80,000.& was sold for Rs.45,000.The closing balance of provision for depreciation account as of 31.03.2007 will be Rs.1,20,000 Rs.2,28,000 Rs.3,44,000 Rs.3,03,520 24 / 30 Q.7 X purchased a machine on 01.01.2007 for Rs.2,40,000 , Installation charges Rs.20,000 ,residual value after 5 years Rs.10,000 On .1.7.2007 ,expenses for repairs were incurred to the extent of Rs.4,000, depreciation is provided under WDV method .depreciation rate 10%. depreciation for the 4th year will be Rs.26,000 Rs.21,060 Rs.18,954 Rs.50,000 25 / 30 Q.6 date of purchase 01.07.2006 , purchase price of machine Rs.80,000 , Installation charges Rs.20,000 ,residual value Rs.40,960 , useful life 4 years, accounting year --financial year; date when machine was put to use 1.10.2006 .The depreciation under WDV method for the year 06-07 will be Rs.20,000 Rs.10,000 Rs.15,000 None of these 26 / 30 Q.5 purchase price of machine Rs.1,50,000 , Installation charges Rs.50,000 ,residual value Rs.81,920 ,.The rate of depreciation under SLM is .14.76% .the useful life of machine is _______ years 6 5 4 None of these 27 / 30 Q.4 date of purchase 01.07.2006 , purchase price of machine Rs.80,000 , Installation charges Rs.20,000 ,residual value Rs.40,960 , useful life 4 years, accounting year --financial year .The depreciation under SLM for the year 06-07 will be Rs.22,500 Rs.14,760 Rs.11,070 None of these 28 / 30 Q.3 A new machine costing Rs.1 lakh was purchased by a company to manufacture a special product. Its useful life is estimated to be above 5 years and scrap value at Rs.10,000.The production plan for the next 5 years using the above machine is as follows :Year 1, 5,000 units , Year 2, 10,000 units , Year 3, 12,000 units , Year 4, 20,000 units , Year 5, 25,000 units ,;The depreciation expenditure for the 1st year under units-of-production method will be Rs.6,250 Rs.12,500 Rs.15,000 Rs.25,000 29 / 30 Q.2 B Ltd has been charging depreciation on the SLM basis .It charges a full year depreciation even if the machinery is utilized only for part of the year . An equipment which was purchased for Rs.3,50,000 now stands at Rs.2,97,500 after depreciating at the rate of 5% on a straight line basis . Now the company decides to change the methods of Depreciation with retrospective effect. The applicable reducing balance rate for this machinery would be 8%p.a.assuming that before the effect of this changes could be accounted , depreciation for the current year is already charged based on SLM and is reflected in the depreciated value of Rs.2,97,500. SLM depreciation p.a. is 15,000 17,500 35,000 52,500 30 / 30 Q.1 Original cost = Rs.1,26,000: Salvage value = 6,000.Depreciation for the 2nd year @10% p.a.under wdv method 10,800 11,340 15,000 14,000 Your score is LinkedIn Facebook Twitter VKontakte