Quiz on Depreciation

Amit Ltd. purchased a machine on 01.01.2021 for Rs 1, 20,000. Installation expenses were Rs 10,000. Residual value after 5 years Rs 5,000. On 01.07.2021, expenses for repairs and maintenance were incurred to the extent of Rs 2,000. Depreciation is provided under straight line method. Depreciation rate is 10%. Annual Depreciation  =

• 13,000

• 12,500

• 13,100

• 12,600

Original cost = Rs.1, 26,000; Salvage value = Nil; Useful life = 6 years. Depreciation for the fourth year under sum of years digits method  will be

• 6000

• 12000

• 18000

• 24000

In the  case  of downward revaluation of an asset which is  for the  first time  revalued, the account to  be  debited  is

• Asset A/c

• Revaluation Reserve A/c

• Profit & Loss A/c

• Asset Disposal A/c

An asset was purchased for Rs. 12,500 and was depreciated under Reducing Balance Method at the rate of 20% p.a. What is the value of the asset at the end of three years?

• 8000

• 10000

• 6400

• 1600

The WDV of an asset after three years of depreciation on the reducing balance method   @ 10% p.a. is Rs. 36,450.What was original value?

• 40000

• 50000

• 45000

• 70250

Original Cost Rs. 1,26,000; Salvage Value Rs. 6,000; Useful Life 6 year

What will be the book value of the asset as at the beginning of fourth year (Under Sum of year’s digits method?)

• 103143

• 40286

• 45987

• 99256

A Trader purchased machinery for Rs.10, 000 in Jan 2019. Depreciation is charged @ 25% diminishing balance. At the end of third year it was sold for Rs. 1,000.Profit or loss on sale of machine will be :

• Loss 3219

• Loss 4625

• Loss 2164

• 0

For which of the following depletion method will be applied

• Land

• Property

• Plant

• Coal Mine

A business has a machine which is depreciated using an Accelerated Depreciation method. Which statement is true?

• Depreciation charged in each year is equal

• Depreciation charged in 1^st year is less than 2^nd year

•    Depreciation charged in 2^nd  year is less than 1^st  year

•      Depreciation will fluctuate every year.

The cost of using asset to earn revenue should be equated in the profit & loss Account to the revenue earned. Which concept is complied with for making provision for depreciation?

• Prudence

• Consistency

• Matching

• Cost