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Test: Depreciation Accounting - 3 - Commerce MCQ


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30 Questions MCQ Test Accountancy Class 11 - Test: Depreciation Accounting - 3

Test: Depreciation Accounting - 3 for Commerce 2024 is part of Accountancy Class 11 preparation. The Test: Depreciation Accounting - 3 questions and answers have been prepared according to the Commerce exam syllabus.The Test: Depreciation Accounting - 3 MCQs are made for Commerce 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Depreciation Accounting - 3 below.
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Test: Depreciation Accounting - 3 - Question 1

Useful life of an asset can be described as : 

Detailed Solution for Test: Depreciation Accounting - 3 - Question 1

Useful life of an asset can be described as the period over which depreciable asset is expected to be used by the enterprise and the number by the enterprise similar units expected to be obtained from the use of the asset by the enterprise. It is basically how long the asset is contributing to the enterprise.

Test: Depreciation Accounting - 3 - Question 2

If depreciation rate is equal, the amount of depreciation in SLM method as compared to WDV method will be _________

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Test: Depreciation Accounting - 3 - Question 3

The main objective of providing depreciation is to : 

Test: Depreciation Accounting - 3 - Question 4

Rohan Ltd. is in the business of extracting Coal from Mines. It should charge depreciation as per:

Test: Depreciation Accounting - 3 - Question 5

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

Detailed Solution for Test: Depreciation Accounting - 3 - Question 5

Value of asset at the end of 2nd year = value at the end of 3rd year x 100/90

                                                                = 36,450 x 100/90 

                                                                = RS-40,500.

Value of asset at the end of 1st year = value at the end of 2nd year x 100/90

                                                             = 40,500 x 100/90

                                                             = RS-45,000.

Original value =  Value at the end of 1st year x 100/90

                        = 45,000 x 100/90

                        = RS-50,000.

Test: Depreciation Accounting - 3 - Question 6

 Cost of an asset Rs. 75,000. Useful life is 4 years. Find out the depreciation for the 1st year under sum of years digit method: 

Test: Depreciation Accounting - 3 - Question 7

A machine purchased for Rs. 5, 00,000 has an estimated working life of 10,000 hours, scrap value estimated Rs. 1, 00,000. Their anticipated pattern of working hours is as follows:
Year Hours (p.a) 
1-2 1500 
3-6 1000 
7-10 750 
Depreciation for the third year would be:

Test: Depreciation Accounting - 3 - Question 8

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)

Test: Depreciation Accounting - 3 - Question 9

Which method of depreciation takes into account the element of Interest on Capital outlay: 

Test: Depreciation Accounting - 3 - Question 10

Scrap value of an asset means the amount it can fetch on sale at the ______of its useful life :

Test: Depreciation Accounting - 3 - Question 11

___________method of depreciation takes into account the element of interest on capital outlay and seeks to write off the value of the asset as well as the interest lost over the life of the asset: 

Test: Depreciation Accounting - 3 - Question 12

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

Test: Depreciation Accounting - 3 - Question 13

 Depreciation starts on a machine from the date: 

Test: Depreciation Accounting - 3 - Question 14

Which method of depreciation is suitable when expenditure on repairs and maintenance, increases as the machine grows old?

Test: Depreciation Accounting - 3 - Question 15

Annuity method is designed for which of the following : 

Test: Depreciation Accounting - 3 - Question 16

Vijay Traders purchased Car on 1.4.08 for Rs. 3,00,000. They are charging depreciation on written Down Value method. On 31.3.09 they sold the Car for Rs. 1,65,000 and incurred a loss of Rs. 7,5000. The rate of depreciation p.a. is :-

Test: Depreciation Accounting - 3 - Question 17

Cost of machinery  Rs. 2,52,000
Salvage value         Rs. 12,000
Useful life               6 years
Annual depreciation under straight line method will be :

Test: Depreciation Accounting - 3 - Question 18

Which of the following is the meaning of entry stated in the machinery A/c 

Test: Depreciation Accounting - 3 - Question 19

Which of the following statements is/are false?
I. The term ‘depreciation’, ‘depletion’ and ‘amortization’ convey the same meaning.
II. Provision for depreciation A/c is debited when provision for depreciation A/c is created.
III. The main purpose of charging the profit and loss A/c with the amount of depreciation is to spread the cost of an asset over its useful life for the purpose of income determination.

Test: Depreciation Accounting - 3 - Question 20

A mine was taken on lease for Rs. 2,00,00,000. Its total production capacity is 4,00,000 mt. What will be the depreciation in 2007 if it produced 30,000 m.t. in 2007?

Test: Depreciation Accounting - 3 - Question 21

A purchased a mine for Rs. 2,50,000 minerals in the mine were expected to be 5,00,000 tonnes. In the first year, 50,000 tones of minerals were used. What is the depreciation for the first year?

Test: Depreciation Accounting - 3 - Question 22

Amit Ltd. purchased a machine on 01.01.2003 for Rs. 1,20,000. Installation expenses were Rs. 10,000. Residual value after 5 years Rs. 5,000. On 01.07.2003, expenses for repairs were incurred to the extent of Rs. 2,000. Depreciation is provided under straight line method. Depreciation rate = 10%. Annual Depreciation = _________.

Test: Depreciation Accounting - 3 - Question 23

Price of the computer = Rs. 50,000
Residual value = Rs. 10,000
Hours worked for the year = 6000 hrs.
Estimated life of computer = 20,000 hrs.
Calculate the amount of depreciation  

Test: Depreciation Accounting - 3 - Question 24

A machine was purchased on 1st April, 2007 for Rs. 5,00,000 and 1st October, 2007 for Rs. 2,00,000. Calculate depreciation @ 20% p.a. on written down value method for the year ending 31st March, 2008.

Test: Depreciation Accounting - 3 - Question 25

 The number of production or similar units expected to be obtained from the use of an asset by an enterprise is called as 

Test: Depreciation Accounting - 3 - Question 26

Cost of Machine Rs. 1, 00,000 scrap value Rs. 10,000 and life is 4 years. What will be amount of depreciation according to sum of years digits method in the 3rd year?

Test: Depreciation Accounting - 3 - Question 27

A depreciable asset may suffer obsolescence due to:

Test: Depreciation Accounting - 3 - Question 28

 Under Annuity method Asset A/c is debited by : 

Test: Depreciation Accounting - 3 - Question 29

Under annuity method, the amount of depreciation is :

Test: Depreciation Accounting - 3 - Question 30

Which of the following is the meaning of entry stated in the machinery A/c? 

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