Depreciation

Depreciation is:

• the cost of a current asset wearing away

• the cost of a replacement for a fixed asset

• the salvage value of a fixed assets plus it original cost

• the part of the cost of the fixed asset consumed during its period of use by the business

The straight line method of depreciation consists of:

• unequal amounts of depreciation each year

• increasing amounts of depreciation each year

• reducing amounts of depreciation each year

• equal amounts of depreciation each year

For the first 3 years Dyasha Designs calculated the straight line method of deprecation in its fixed assets. In year 4, the business decided to calculate depreciation using the reducing balance method. The accounting concept that is being violated is

• Accrual

• Prudence

• Matching

• Consistency

A machine costs $10 000. It has an expected life of

six years and a residual value of $400. Using the

straight-line method, what is the depreciation per

annum?

• $1 600

• $2 400

• $9 600

• $10 400

How much would be provide for depreciation this

year using the reducing balance method?

• $1 000

• $1 900

• $2 000

• $2 100

A plant valued at $4 000 is depreciated at 10% per

annum using the diminishing balance method. What

is its value after TWO years?

• $3 200

• $3 240

• $3 920

• $3 980

Office equipment was purchased for $155,000. Its useful life is 5 years and the residual value is $20,000.

What is the depreciation expense for the second year?

• $ 27 000

• $ 54 000

• $ 81 000

• $135 000

The total net book value at the beginning of year 4 is

• $ 27 000

• $ 81 000

• $ 74 000

• $101 000

A motor vehicle which costs $150 000 is to be depreciated by 10% per annum. It is expected to remain in the business for 4 years.

Using the Reducing Balance Method, what is the provision for depreciation after 3 years?

• $10 930

• $12 150

• $13 500

• $15 000

What is the net book value of the motor vehicle at the end of the 4 years?

• $ 98 415

• $ 98 145

• $100 145

• $109 350