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DEPRECIATION

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10 views2 pages

DEPRECIATION

Uploaded by

amanpaswan1534
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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ACCOUNTANCY

CLASS 11
DEPRECIATION
Ques1. Loss on sale of asset is shown on:
(a) debit side of machinery account
(b) credit side of depreciation account
(c) debit side of depreciation account
(d) credit side of machinery account.
Ques2. Depletion method of depreciation is applicable to:
(a) Current Assets (b) Fictitious Assets
(c) Intangible Assets (d) Wasting Assets
Ques3. The main objective of providing depreciation is:
(a) to ascertain true profit
(b) to reduce the income tax amount
(c) to know the true financial position
(d) all of the above
Ques4.The term ‘amortisation’ is used in term of:
(a) Fixed Assets (b) Intangible Assets
(c) Tangible Assets (d) Wasting Assets
Ques5. A firm purchased on 1st April, 2016 a second-hand machinery for Rs36,000 and spent Rs 4,000 on
its installation.On 1st October in the same year, another machinery costing Rs20,000 was purchased.On 1st
October, 2018, machinery bought on 1st April, 2016 was sold for Rs12,000 and a new machine purchased
for Rs 64,000 on the same date. Depreciation is provided annually
on 31st March @ 10% p.a. on the Written Down Value Method. Show the Machinery
Account from 2016-17 to 2018-19.
Ques6. Prateek Ltd. purchased a machinery on 1st April, 2015 for Rs 5,20,000 and spent Rs 80,000 on its
installation. On 1st December, 2015 it purchased another machine for Rs 3,70,000.On 1st August, 2016 it
purchased another machine for Rs8,00,000 and incurred Rs30,000 as installation expenses and paid
Rs10,000 as wages.
Depreciation was provided on machinery @ 10% p.a. on original cost method annually
on 31st March, Prepare:
(i) Machinery account and depreciation account for the years 2015-16, 2016-17, 2017-18
and 2018-19.
(ii) If depreciation is accumulated in provision for depreciation account then prepare
machinery account and provision for depreciation account for the years 2015-16,
2016-17, 2017-18 and 2018-19.
Ques7.The following balances appear in the books of Crystal Ltd., on 1st April, 2018 Machinery Account
Rs 15,00,000
Provision for Depreciation Account Rs 5,50,000
On 1st July, 2018, a machinery which was purchased on 1st April, 2015 for Rs2,00,000 was sold for
Rs75,000. A new machine was purchased on 1st October, 2018 for Rs6,00,000.Depreciation is provided on
machinery at 20% p.a. on straight line method and books are closed on 31st March every year. Prepare the
machinery account and provision for depreciation account for the year ending 31st March, 2019.

Ques8 Depreciation is helpful in ascertaining true amount of profit or loss. Comment.

Ques9. Depreciation is a cash expenditure. Do you agree?


Ques10.M/s Excellent Services Provider replaced its old machinery because new inventions and techniques
have come in the market. What is the cause of this kind of depreciation?
.
Ques11 Anil Traders purchased a machinery costing Rs2,60,000. You are required to determine the amount
of depreciation for the second year according to the written down value method @ 10%.

Ques12. What is the main point of distinction between straight line method and written down value method
of charging depreciation.

Ques13. What method of depreciation assumes that the asset is depreciated more in the earlier years and less
in later years of its life?

Ques14. It is necessary to charge depreciation on the assets to know the true financial position of the
business. Do you agree?

Ques15. Depreciation is the cost of the fixed assets that has expired because of its usage and with afflux of
time. Do you agree?

Ques16. What will be the amount of depreciation of Plant for fifth year as per straight line method when
original cost of plan Rs10,00,000; Salvage value Rs 40,000, Expected useful life 10 years. Mention the rate
of depreciation.

Ques17: A Noida based Construction Company owns 5 cranes and the value of this asset in its books on 1st
July, 2018 is Rs 40,00,000. On1st January, 2019 it sold one of its cranes whose value was Rs 5,00,000 on 1st
July, 2018 at a 10% profit. On the same day, it purchased 2 cranes for Rs 4,50,000 each. Prepare cranes
account. It closes the books on 31st March and provides for depreciation at 10% written down value.

Ques18: On 1st April, 2015 a Limited Company purchased machinery for Rs20,00,000. Depreciation is
provided @ 15% p.a. on diminishing balance method. On 1st June, 2017, one-fourth of machinery was
damaged by fire and Rs 40,000 were received from the insurance company in full settlement. On 1st
December, 2017, another machinery was purchased by the company for Rs15,00,000.
Write up the machinery account from 2017-18 to 2018-19. Books are closed on 31st March every year.

Ques19. Depreciation is a charge on:


(a) Fixed Assets (b) Current Assets
(c) Intangible Assets (d) Fictitious Assets

Ques20: In Machinery Account, depreciation charged is shown:


(a) on the debit side (b) on the credit side
(c) as closing balance (d) all of the above

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