Depreciation Accounting
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Questions
The amount of depreciation is equal for all the years under
- straight line and annuity methods
- annuity method
- diminishing balance method
- straight line method
The amount of depreciation does not depend upon
- will of business
- cost of asset
- scrap value
- life of asset
The taxation authorities normally follow
- straight line method
- written down value method
- annuity method
- sinking fund method
Which of the following is not true about straight line method?
- It is also known as original cost/fixed installment method.
- Depreciation remains same from year to year.
- It is generally basis of charging depreciation as per the Income Tax Act.
- The residual value of asset becomes zero after certain years.
The amount of depreciation is equal for all the years under
- straight line and annuity methods
- annuity method
- <span style="direction:">diminishing balance method
- straight line method
The method where amount of depreciation is more in initial year and gradually goes on decreasing is
- straight line method
- annuity method
- <span style="direction:" ltr;="">diminishing balance method
- both straight line and annuity method
Which of the following assets never depreciates?
- Building
- Land
- Vehicles
- Tools
A machine costing Rs. 2,00,000 having scrap value of Rs. 50,000 after 5 years is to be depreciated under sum of digit method. The depreciation to be charged in the 2nd year will be
- Rs. 20,000
- Rs. 40,000
- Rs. 10,000
- Rs. 30,000
A machine costing Rs. 4,50,000 and having scrap value of 20% of cost after 5 years was purchased on 31 July, 2009. It is to be depreciated under straight line method. The depreciation to be charged for year ending 31 March, 2010 will be
- Rs. 48,000
- Rs. 72,000
- Rs. 54,000
- Rs. 42,000
A machine costing Rs. 9,60,000 was purchased on 15 July, 2009. It is to be depreciated at12.5% P.A. under diminishing balance method. The depreciation to be charged for year ending 31 March, 2010 will be
- Rs. 1,20,000
- Rs. 85,000
- Rs. 75,000
- Rs. 95,000
The method in which cost of asset as well as interest on capital is also considered as the basis of depreciation is
- straight line method
- written down value method
- annuity method
- sinking fund method
The method in which amount chargeable to depreciation along with interest received is invested every year is called
- straight line method
- written down value method
- annuity method
- sinking fund method
Any deficit from sinking fund to the value of machine is transferred to
- profit and loss account
- general reserve
- capital reserve
- capital redemption reserve
A machine costing Rs. 6,60,000 was purchased on 1 April, 2009. It has estimated scrap value of Rs. 60,000. It is estimated that it will produce 60,000 units during its working life. It produced 4,800 units during the year ending 31 March, 2010. The depreciation to be charged for the year ending 31 March, 2010 will be
- Rs. 52,800
- Rs. 24,000
- Rs. 48,000
- Rs. 6,00,000
A machine costing Rs. 3,60,000 was purchased on 1 April, 2009. It has estimated scrap value of Rs. 30,000. It is estimated that it will be used for 30,000 hours during its working life. It worked for 10 hours a day for 300 days during the year. The depreciation to be charged for year ending 31 March, 2010 will be
- Rs. 33,000
- Rs. 36,000
- Rs. 30,000
- Rs. 3,30,000
The method used for depreciating mines, quarries etc. is
- machine hour method
- depletion method
- annuity method
- sinking fund method
A machine was being depreciated at 10% as per straight line method. Now, the business decided to depreciate it at the same rate by diminishing balance method with retrospective date. The differences in the amount of depreciation will be
- credited to machinery account
- debited to machinery account
- debited to P and L account
- nil
The assets should be recorded in the balance sheet at
- market value
- cost price
- M.V. or cost price, whichever is less
- cost less depreciation
If a machinery is purchased during the year but is not used at all, then it is
- depreciated for full year
- depreciated for half year
- not to be depreciated for that year
- depreciated for one month
The amount of interest paid for the loan taken for the purchase of machinery before its installation is
- capital expense
- revenue expense
- deferred revenue expense
- not an expense at all
A machine costing Rs. 10,00,000 was purchased on 1 July, 2008. It is to be depreciated @12.5% P.A. under diminishing balance method. The machine was sold on 31 March, 2010 for Rs. 7,00,000. Find out the profit or loss on sale of machine.
- Rs. 50,000 profit
- Rs. 50,000 loss
- Rs. 65,625 profit
- Rs. 92,969 loss
The value of a machine on 1 April, 2010 was Rs. 29,16,000. It was purchased on 1 April, 2007 and was being depreciated at 10% by diminishing balance method. Find its original cost.
- Rs. 40,00,000
- Rs. 32,40,000
- Rs. 36,00,000
- Rs. 29,16,000
A machine costing Rs. 10,00,000 was purchased on 1 April, 2008. It is to be depreciated at15% P.A. under straight line method. The machine was sold on 31 July, 2010 for Rs. 7,00,000. Find out the profit or loss on sale of machine.
- Rs. 50,000 profit
- Rs. 50,000 loss
- Rs. 1,50,000 profit
- Rs. 1,50,000 loss
The charging of depreciation in the books
- reduces the tax liability
- increases the tax liability
- does not make any difference to tax liability
- none of these