Tag: asset disposal account

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Multiple choice accountancy depreciation accounting asset disposal account disposal of asset disposal of asset and any addition or extension to the existing asset

What is credited in asset disposal account?

  1. Accunulated depreciation 

  2. Original cost of the asset being sold

  3. Sale proceeds of the assets disposed off

  4. Both (a) and (c)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Asset disposal account is prepaed to ascertain profit or loss, when the asset is sold or dicarded. Asset disposal account is credited with :

1. Accumulated depreciation
2. Sale proceeds of the asset disposed off.

Multiple choice accountancy depreciation accounting asset disposal account disposal of asset disposal of asset and any addition or extension to the existing asset

Book value of machinery is Rs.1,00,000 .
Rate of depreciation is 10%
New addition to machinery was made on 1/10/2016 of Rs.5000
What will be the depreciation for year ending 31/3/2017?

  1. Rs.10500

  2. Rs.10000

  3. Rs.10250

  4. Rs.11000
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Book Value of Machinery is Rs.100000

Addition to Machinery on 1/10/2016 of Rs.5000
Rate of Depreciation is 10%

Depreciation will be calculated as:

Depreciation @10% on Rs.100000                       Rs.10000
Depreciation @10% on Rs.5000 for 6 months= 5000 *10% *6/12
                                                                               =Rs.250
Total Depreciation will be Rs.10000+Rs.250= Rs.10250

Multiple choice accountancy depreciation accounting asset disposal account disposal of asset disposal of asset and any addition or extension to the existing asset

Book value of machinery is Rs.3,00,000 .
Rate of depreciation is 15%
New addition to machinery was made on 1/1/2015 of Rs.20000
What will be the depreciation for year ending 31/3/2015?

  1. Rs.46500

  2. Rs.45750

  3. Rs.45000

  4. Rs.50000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Book Value of Machinery is Rs.300000

Addition to Machinery on 1/1/2015 for Rs.20000
Rate of Depreciation is 15%

Depreciation will be calculated as:

Depreciation @15% on Rs.300000                 Rs.45000
Depreciation @15% on Rs.20000 for 3 months =Rs.20000 *15% *3/12
                                                                               =Rs.750
Total Depreciation will be Rs.45000+Rs.750= Rs.45750

Multiple choice accountancy depreciation accounting asset disposal account disposal of asset disposal of asset and any addition or extension to the existing asset

Book value of machinery is Rs.4,00,000 .
Rate of depreciation is 10%
New addition to machinery was made on 1/10/2016 of Rs.35000
What will be the additional depreciation for year ending 31/3/2017?

  1. Rs.41750

  2. Rs.1750

  3. Rs.43500

  4. Rs.3500
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Cost of Machinery is Rs.400000

Additional machinery purchased on 1/10/2016 is Rs.35000
Rate of depreciation is @10%

Depreciation @10% on the old machinery for 2016-17         Rs.40000
Additional depreciation @10% on Rs.35000 for 6 months: 
                                                =35000  *10% *6/12             = Rs.1750

Multiple choice accountancy depreciation accounting asset disposal account disposal of asset disposal of asset and any addition or extension to the existing asset

Profit on sale of Asset is __________ to Profit and loss A/c.

  1. Debited

  2. No Effect

  3. Credited

  4. None
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Following are the journal entries in respect of sale of fixed assets :

1. Cash/ Bank  A/c      Dr.
        To Asset A/c
(Being the asset sold)
2. Asset A/c                Dr. 
         To Profit & Loss A/c
(Being the transfer of profit on sale).

Multiple choice accountancy depreciation accounting asset disposal account disposal of asset disposal of asset and any addition or extension to the existing asset

___________ is designed to provide a complete and clear view of all the transactions involved in the sale of asset under one account head.

  1. Asset sale A/c

  2. Asset Clear A/c

  3. Asset Disposal A/c

  4. None
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Asset Disposal A/c.

Asset Disposal A/c is designed to provide a complete and clear view of all the transaction involved in gthe sale of asset unfer one acount head. The original cost of asset being sold is debited to the asset disposal account and accumulated depreciation amount appearing in provision for depreciation account relating to that asset till the date of disposal is credited to the asset disposal account. The net amount realised from the sale of the asset is also crerdited to this account. The balance of asset disposal account shows profit or loss which is transferred to profit and loss account. The advantage of this method is that it gives full picture of all the transactions related to asset disposal at one place.

Multiple choice accountancy depreciation accounting asset disposal account disposal of asset disposal of asset and any addition or extension to the existing asset

________can take place either at the end of life of asset or during its useful life.

  1. Purchase of asset

  2. Disposal of asset

  3. Collection of asset

  4. None of the Above.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Asset disposal is the removal of a company's long term asset from the company's accounting records. It is an important concept because it primarily relates to company's capital assets. A depreciable asset can be disposed off or sold either at the end of its useful life or during its useful life. Disposal of asset may be during its useful life due to obsolescence or other factors. 

Multiple choice accountancy depreciation accounting asset disposal account disposal of asset disposal of asset and any addition or extension to the existing asset

Original cost - 2,50,000, Accumulated Deprecation - 50,000, Sale Price - 2,00,000
calculate resulting profit and loss.

  1. Loss 50,000

  2. Profit 50,000

  3. Loss 15000

  4. No Profit No Loss
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Solution to the given problem is as under:


Original Cost                                              Rs.250000
Less: Accumulated depreciation              Rs. 50000
                                                                  -------------------
Written down value of the asset               Rs.200000
Less: Sale Price                                          Rs.200000
                                                                  -------------------
Profit/Loss on sale of asset                          Rs. NIL
                                                                  --------------------

Multiple choice accountancy depreciation accounting asset disposal account disposal of asset disposal of asset and any addition or extension to the existing asset

Loss on sale of asset is ___________ to profit and loss A/c.

  1. Debited

  2. Credited

  3. No Effect

  4. None
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Following are the journal entries in respect of sale of fixed assets :

1. Cash/ Bank  A/c      Dr.
        To Asset A/c
(Being the asset sold)
2. Profit & Loss A/c   Dr. 
        To Asset A/c
(Being the transfer of loss on sales).

Multiple choice accountancy depreciation accounting asset disposal account disposal of asset disposal of asset and any addition or extension to the existing asset

Original cost - 100000, Accumulated Deprecation - 80000, Sale Price - 15000
calculate resulting profit and loss.

  1. Loss 20,000

  2. Profit 20,000

  3. Loss 5000

  4. Profit 5000
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Solution to the given problem is as under:


Original Cost                                              Rs.100000
Less: Accumulated depreciation              Rs. 80000
                                                                  -------------------
Written down value of the asset               Rs.20000
Less: Sale Price                                          Rs. 15000
                                                                  -------------------
Loss on sale of asset                                 Rs. 5000
                                                                  --------------------