MCQ ON THEORY
MEANING, DEFINITION, CHARACTERISTICS,
CAUSES & OBJECTIVIES OF DEPRECIATION
1. Depreciation is a measure of the wearing out,
consumption or other loss of value of a
depreciable asset arising from …………..
(a) Use
(b) Effluxion of time
(c) Obsolescence through technology and
market changes
(d) Any of the above
2. Depreciation is a …………… shrinkage in the
book value of a fixed asset.
(a) Permanent
(b) Continuous
(c) Gradual
(d) Any of the above
3. Depreciation is generally provided on ……….
(a) Current assets
(b) Fixed assets
(c) Loans & Advances
(d) Fixed liabilities
4. On which of the following asset depreciation
cannot be provided?
(a) Building
(b) Land
(c) Mines
(d) Loose tools
5. Depreciation is the fall in the …………….. of a
fixed asset through physical wear and tear due
to use or passage of time or from any other
cause.
(a) Quality
(b) Value
(c) Either (a) or (b)
(d) None of the above
6. Depreciable assets are assets which ………….
(a) Are expected to be used for more than one
accounting period
(b) Do not have a limited useful life
(c) Are held by the organization for sale in
regular course of business
(d) All of the above
7. …………… has defined depreciation as “a
measure of the wearing out, consumption or
other loss of value of a depreciable asset arising
from use, effluxion of time or obsolescence
through technology and market changes.
Depreciation is allocated so as to charge a fair
proportion of depreciable amount in each
accounting period during the expected useful life
of the asset. Depreciation includes amortization
of assets whose useful life is predetermined”.
(a) The Institute of Chartered Accountants of
England
(b) The Institute of Chartered Accountants of
India
(c) American Institute of Certified Public
Accountants
(d) The Institute of Chartered Accountants of
Pakistan
8. Depreciation Accounting has been defined by
the ……………. As “a system of accounting
which aims to distribute the cost or other basic
value of tangible capital assets less salvage (if
any) over the estimated useful life of the unit
(which may be a group of assets) in a
systematic and rational manner. It is a process
of allocation and not of valuation”.
(a) The Institute of Chartered Accountants of
England
(b) The Institute of Chartered Accountants of
India
(c) American Institute of Certified Public
Accountants
(d) The Institute of Chartered Accountants of
Pakistan
9. Which of the following is/are the important
characteristic of depreciation?
(a) Depreciation is permanent, continuous and
gradual increase in the value of a fixed asset
(b) Depreciation is appropriation of profit
(c) Depreciation is always computed in a
systematic and rational manner
(d) All of the above
10. Which of the following is/are the important
characteristic of depreciation?
(a) Depreciation is a process of allocation of
future cost
(b) Depreciation is caused due to physical
factors and functional factors
(c) Total depreciation can exceed its
depreciable value or original cost
(d) All of the above
11. Which of the following is/are the important
characteristic of depreciation?
(a) Depreciation is sudden loss
(b) Depreciation is an appropriation of profit
(c) Depreciation is one of the methods for
valuation of fixed assets
(d) None of the above
12. Which of the following is/are not the important
characteristic of depreciation?
(a) Total depreciation can exceed its
depreciable value or original cost
(b) Depreciation is calculated in respect of fixed
assets only
(c) Depreciation is always computed in a
systematic and rational manner
(d) All of the above
13. The fundamental objective of depreciation is/are
……………
(a) To maintain the nominal capital invested in
fixed assets
(b) To allocate the expired portion of the cost of
fixed assets over a number of accounting
periods
(c) Both (a) & (b)
(d) None of the above
14. Which of the following is/are cause for providing
depreciation?
(a) Physical wear and tear resulting from use
(b) Physical deterioration resulting from
atmospheric exposure
(c) Passage of time
(d) All of the above
15. Which of the following is/are cause for providing
depreciation?
(a) Obsolescence
(b) Depletion in case of wasting assets
(c) Passage of time
(d) All of the above
16. Which of the following is/are cannot be treated
as cause for providing depreciation?
(a) Obsolescence
(b) Depreciation is an appropriation of profit
(c) Physical wear and tear resulting from use
(d) Passage of time
17. Which of the following is/are the objectives of
providing depreciation?
(a) To meet the legal requirements
(b) To derive maximum tax benefit
(c) To ascertain the proper cost of the product
(d) All of the above
18. Which of the following is/are the objectives of
providing depreciation?
(a) To make provision for receivables
(b) To derive maximum tax benefit for excise
duty by taking Cenvat credit
(c) To present true financial position
(d) All of the above
19. Which of the following is/are the objectives of
providing depreciation?
(a) To ascertain the correct profit
(b) To meet the legal requirements
(c) To present true financial position
(d) All of the above
20. Which of the following is/are not the objectives
of providing depreciation?
(a) To create secrete reserve
(b) To derive maximum tax benefit
(c) To ascertain the proper cost of the product
(d) All of the above
21. Which
of
the
following
factor
affect
measurement of depreciation?
(a) Original cost
(b) Estimated useful life
(c) Scrap or the residual value
(d) All of the above
22. Which of the following statement is incorrect?
(a) Depreciation is the expense charged to profit
and loss account before arriving at the net profit
for the year
(b) The cost of fixed asset in the form of
depreciation has to be matched against the
revenues of the years over which the asset is
used
(c) Depreciation means apportionment or
allocation of the cost of the fixed asset over its
useful life
(d) None of the above
METHODS OF DEPRECIATION
23. Under which of following method depreciation is
charged uniformly?
(a) Straight line method (SLM)
(b) Annuity method
(c) Depreciation fund method
(d) All of the above
24. Under which of following method depreciation is
charged uniformly?
(a) Insurance policy method
(b) Annuity method
(c) Depreciation fund method
(d) All of the above
25. Under which of following method depreciation is
not charged uniformly?
(a) Fixed instalment method
(b) Sum of year digit method
(c) Depreciation fund method
(d) All of the above
26. Under which of following method depreciation is
not charged uniformly?
(a) Fixed instalment method
(b) Insurance policy method
(c) Double decline method
(d) All of the above
27. Under which of following method depreciation
charged declines?
(a) Diminishing balance method
(b) Sum of year digit method
(c) Double decline method
(d) All of the above
28. Under which of following method depreciation
charged does not decline?
(a) Fixed instalment method
(b) Sum of year digit method
(c) Double decline method
(d) All of the above
29. Under which of following method depreciation
charged does not decline?
(a) Diminishing balance method
(b) Annuity method
(c) Double decline method
(d) All of the above
30. Under which of following method depreciation
charged does not decline?
(a) Diminishing balance method
(b) Sum of year digit method
(c) Depreciation fund method
(d) All of the above
31. Under which of following method depreciation
charged does not decline?
(a) Straight line method (SLM)
(b) Annuity method
(c) Depreciation fund method
(d) All of the above
32. Under which of following method depreciation
charged does not decline?
(a) Insurance policy method
(b) Annuity method
(c) Depreciation fund method
(d) All of the above
33. ……………. Method, a fixed proportion of the
original cost of the asset is written off each year
so that asset account may be reduced to its
residual value at the end of its estimated
economic useful life.
(a) Fixed instalment method
(b) Sum of year digit method
(c) Double decline method
(d) All of the above
34. Which of the following is correct formula for
charging depreciation under fixed instalment
method?
(a) Depreciation = Scrap Value-Original cost
Life of the asset
(b) Depreciation = Life of the asset-Scrap Value
Original cost
(c) Depreciation = Original cost-Scrap Value
Life of the asset
(d) Depreciation = Scrap Value-Life of the asset
Original cost
35. Which of the following is/are advantage of fixed
instalment method of charging depreciation?
(a) This method is acceptable to income tax
authorities
(b) The value of the asset can be completely
written off, i.e. the value can be reduced to zero
(c) The efficiency and usefulness is more in
early years so depreciation amount is also more
in early years and goes on diminishing year to
year
(d) All of the above
36. Which of the following is/are, cannot be treated
as advantage of fixed instalment method of
charging depreciation?
(a) It is a simple and easy method
(b) It takes into account the effective utilization
of the asset
(c) This method can be applied where asset
gets depreciated because of effluxion of time
like furniture, equipments, patents, leasehold
etc.
(d) All of the above
37. Which of the following is/are disadvantage of
fixed
instalment
method
of
charging
depreciation?
(a) The assumption that the asset shall be
equally useful throughout its life seems to be
illogical
(b) It does not take into account the effective
utilization of the asset
(c) Depreciation remains constant under this
method over the useful life of the asset, hence
true financial results cannot be shown by this
method if use of the asset differs from year to
year
(d) All of the above
38. Depreciation fund method is also known as
…………..
(a) Redemption fund method
(b) Amortization fund method
(c) Sinking fund method
(d) All of the above
39. ………….. method, the amount of depreciation
is ascertained in such a way, that if invested
every year with compound interest, it will yield
an amount equal to the cost of asset.
(a) Depletion unit method
(b) Annuity method
(c) Sinking fund method
(d) All of the above
40. ……………. Is a method of depreciation which
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.
(a) Depletion unit method
(b) Annuity method
(c) Sinking fund method
(d) All of the above
41. Under annuity method amount of depreciation
………………
(a) Declines each year over the life of the assets
(b) Remains same for each year up to life of the
assets
(c) Increases each year over the life of the
assets
(d) None of the above
42. Under ……….. method depreciation is provided
as a fixed percentage of the written down value
of the asset.
(a) Fixed instalment method
(b) Annuity method
(c) Reducing balance method
(d) All of the above
43. Which of the following is/are advantage of
reducing balance method /WDV method?
(a) Under this method it is easy to calculate
depreciation rate
(b) Income tax authorities do not accept this
method
(c) The efficiency and usefulness is more in
early years so depreciation amount is also more
in early years and goes on diminishing year to
year
(d) All of the above
44. ……………. Is a method of accelerated
depreciation that allocates larger amounts of
depreciation as an expense during the earlier
years of the life of an asset.
(a) Annuity method
(b) Inventory system of depreciation
(c) Sum of years digit method
(d) All of the above
45. …………… method is applicable in case of
wasting assets, e.g. mines, quarries, oil well etc.
(a) Inventory system of depreciation
(b) Machine hour rate
(c) Sum of years digit
(d) Depletion method
46. Under ……… method depreciation is calculated
on the basis of hours worked during the year by
the machine.
(a) Inventory system of depreciation
(b) Machine hour rate method
(c) Sum of years digit method
(d) Depletion method
47. In case of assets of small value or if the life of
the asset cannot be accurately determined
…………… method of depreciation is applied.
(a) Inventory system of depreciation
(b) Machine hour rate
(c) Sum of years digit
(d) Depletion
48. Where the life of the asset is uncertain ……….
Method of depreciation is applied.
(a) Depletion
(b) Machine hour rate
(c) Inventory system of depreciation
(d) Sum of years digit
49. For which of the following inventory system of
depreciation can be applied?
(a) Animals
(b) Loose tools
(c) Jars & bottles
(d) All of the above
50. For charging depreciation, on which of the
following assets, the depletion method is
adopted?
(a) Goodwill
(b) Plant & machinery
(c) Land & building
(d) Wasting assets like mines and quarries
51. The portion of the acquisition cost of the asset,
yet to be allocated is known as ……………
(a) Salvage value
(b) Accumulated value
(c) Realizable value
(d) Written down value
52. Which of the following is odd one?
(a) Amortization
(b) Capitalization
(c) Depletion
(d) Depreciation
53. Which of the following is odd one with reference
to depreciation?
(a) Land
(b) Machinery
(c) Furniture
(d) None of the above
CHANGE IN METHOD OF DEPRECIATION
54. A change in accounting policy e.g. change in
method of depreciation is justified …………….
(a) To comply with accounting standard
(b) To ensure more appropriate presentation of
the financial statement of the enterprise
(c) To comply with law
(d) All of the above
55. According to AS-6 “Depreciation Accounting”,
issued by the ICAI change in method is
permitted ………………..
(a) Prospectively
(b) Retrospectively
(c) Negatively
(d) None of the above
PRACTICAL MCQ
STRAIGHT LINE METHOD
56. Z Ltd. acquired machinery on 1st January 2011at
a cost of Rs. 72,000 and spent Rs. 8,000 for its
installation. The firm writes off depreciation at
10% p.a. on the original cost every year. The
books are closed on 31st December every year.
Depreciation for 1st & 2nd year as per fixed
instalment method will be Rs. ……………..
(a) 6,000, 6,000
(b) 8,000, 8,000
(c) 8,000, 7,200
(d) 6,000, 8,000
57. Z Ltd. acquired machinery on 1st January 2011
at a cost of Rs. 72,000 and spent Rs. 8,000 for
its installation. The firm writes off depreciation at
10% p.a. on the original cost ever y year. The
books are closed on 31st December every year.
Closing balance of machinery account for 1st &
2nd year as per fixed instalment method will be
Rs. ……………..
(a) 72,000, 64,000
(b) 74,000, 66,600
(c) 74,000, 72,000
(d) 74,000, 66,000
58. K & Co. acquired machinery on 1st July 2012 at
a cost of Rs. 45,000 and spent Rs. 5,000 for its
installation. The firm writes off depreciation at
10% p.a. on the original cost every year. The
books are closed on 31st March every year.
Depreciation for the year ended 31st March 2012
& 31st March 2013 will be Rs. ………… & Rs.
…………
(a) 3,750 & 5,000
(b) 5,000 & 3,750
(c) 3,750 & 3750
(d) 5,000 & 5,000
59. Z Ltd. purchased a machine on 1.1.2012 for Rs.
12,000. Installation expenses were Rs. 1,000.
Residual value after 5 years Rs. 500.
Depreciation
is
provided
under
SLM.
Depreciation rate is 10% p.a. Annual
depreciation = ?
(a) 1,700
(b) 1,300
(c) 2,100
(d) 2,500
60. N Ltd. purchase machinery for Rs. 10,00,000 on
1.1.2012. Installation expenses were Rs.
50,000. Life of the asset is 6 years at the end of
which asset can be sold at Rs. 30,000. Annual
depreciation under straight line method will be =
?
(a) 1,80,000
(b) 1,66,667
(c) 1,70,000
(d) 1,71,667
61. Original cost = Rs. 1,76,400. Salvage value =
Rs. 8,400. Useful Life = 6 years. Annual
depreciation under SLM = ?
(a) 29,400
(b) 28,000
(c) 30,800
(d) None of the above
62. Original cost = Rs. 88,200. Salvage value –
Rs. 4,200. Useful Life = 3 years. Depreciation
rate = ?
(a) 33.3333%
(b) 31.7446%
(c) 34.9206%
(d) None of the above
63. Original cost = Rs. 12,00,000. Salvage value =
2,00,000. Useful Life = 10 years. Annual
depreciation = ? and rate of depreciation = ?
(a) Rs. 1,00,000 & 8.33%
(b) Rs. 1,00,000 & 10%
(c) Rs. 1,20,000 & 12%
(d) Rs. 1,20,000 & 8.33%
64. Machinery costing Rs. 20,00,000 was
purchased on 1.4.2012. The installation charges
amounting Rs. 5,00,000 were incurred. The
depreciation at 10% p.a. on straight line method
for the year ended 31st March 2013 will be
………
(a) 1,50,000
(b) 2,50,000
(c) 2,00,000
(d) 50,000
65. A Ltd. acquired a machine on 1st January 2010
at a cost of Rs. 14,000 and spend Rs. 1,000 on
its installation. The firm writes off depreciation at
10% p.a. of the original cost every year. The
books are closed on 31st December every year.
After 3 years machine sold for Rs. 9,000.
Profit/Loss on sale = ?
(a) Profit – Rs. 1,500
(b) Loss – Rs. 1,500
(c) Profit – Rs. 800
(d) Loss – Rs. 800
66. B Ltd. acquired a machine on 1st January 2010
at a cost of Rs. 14,000 and spend Rs. 1,000 on
its installation. The firm writes off depreciation at
10% p.a. of the original cost every year. The
books are closed on 31st December every year.
After 3 years machine sold for Rs. 13,000.
Profit/Loss on sale = ?
(a) Profit – Rs. 2,500
(b) Loss – Rs. 2,500
(c) Profit – Rs. 2,200
(d) Loss – Rs. 2,200
67. C Ltd. acquired a machine on 1st January 2010
at a cost of Rs. 14,000 and spent Rs. 1,000 on
its installation. The firm writes off depreciation at
10% p.a. of the original cost every year. The
books are closed on 31st December every year.
On 31st May 2013 machine sold for Rs. 8,000.
Profit/Loss on sale = ?
(a) Profit – Rs. 2,275
(b) Loss – Rs. 2,275
(c) Profit – Rs.1,875
(d) Loss – Rs. 1,875
REDUCING BALANCE METHOD
68. Hi-Fi Ltd. acquired machinery on 1st January
2012 at a cost of Rs. 36,000 and spent Rs.
4,000 for its installation. The firm writes off
depreciation at 10% p.a. on WDV basis. The
books are closed on 31st December.
Depreciation for 1st & 2nd year will be Rs.
………& Rs. …………….
(a) 3,600, 3,240
(b) 4,000, 3,600
(c) 3,600, 4,000
(d) 3,240, 2,916
69. Hi-Fi Ltd. acquired machinery on 1st January
2012 at a cost of Rs. 36,000 and spent Rs.
4,000 for its installation. The firm writes off
depreciation at 10% p.a. on WDV basis. The
books are closed on 31st December. Closing
balance of machinery account for 1st & 2nd year
will be Rs. …………… & Rs. ……………
(a) 32,400, 29,160
(b) 36,000, 36,000
(c) 32,400, 36,000
(d) 36,000, 32,400
70. A firm acquired machinery on 1st July 2012 at a
cost of Rs. 45,000 and spent Rs. 5,000 for its
installation. The firm writes off depreciation at
10% per annum on diminishing balance method.
The books are closed on 31st March every year.
Depreciation for the year ended 31st March 2012
& 31st March 2013 will be Rs. ……….. &
Rs……….
(a) 3,750 & 5,000
(b) 4,625 & 3,750
(c) 3,750 & 4,625
(d) 5,000 & 3,750
71. Y Ltd. purchased a machine on 1.1.2012 for Rs.
12,000. Installation expenses were Rs. 1,000.
Residual value after 5 years Rs. 500.
Depreciation
is
provided
under
WDV.
Depreciation rate is 20%. Depreciation for 3 rd
year = ?
(a) 1,664
(b) 1,536
(c) 1,600
(d) None of the above
72. N Ltd. purchased machine for Rs. 1,00,000 on
1.1.2012. Installation expenses were Rs.
10,000. Life of the asset is 5 years at the end of
which asset can be sold at Rs. 5,000.
Depreciation rate is 15% on WDV. Depreciation
for 4th year = Rs. ….?....
(a) 9,212
(b) 9,673
(c) 10,594
(d) 10,133
73. T Ltd. acquired a machine on 1st January 2010
at a cost of Rs. 1,40,000 and spent Rs. 10,000
on its installation. The firm writes off
depreciation at 15% p.a. on WDV. The books
are closed on 31st December every year. After 3
years machine sold for Rs. 87,000. Profit / Loss
on sale = ?
(a) Profit – Rs. 1,023
(b) Loss – Rs. 1,023
(c) Profit – Rs. 5,119
(d) Loss – Rs. 5,119
74. S Ltd. acquired a machine on 1st January 2010
at a cost of Rs. 1,40,000 and spent Rs. 10,000
on its installation. The firm writes off
depreciation at 15% p.a. on WDV. The books
are closed on 31st December every year. After 3
years machine sold for Rs. 97,000. Profit/Loss
on sale = ?
(a) Profit – Rs. 4,881
(b) Loss – Rs. 4,881
(c) Profit – Rs. 11,023
(d) Loss – Rs. 11,023
75. V Ltd. acquired a machine on 1st July 2010 at a
cost of Rs. 15,000. The firm writes off
depreciation at 10% p.a. on WDV. The books
are closed on 31st March every year. On 30th
June 2013 machine sold for Rs. 8,000.
Profit/Loss on sale = ?
(a) Profit – Rs. 2,958
(b) Loss – Rs. 2,958
(c) Profit – Rs. 3,375
(d) Loss – Rs. 3,375
SUM OF YEARS DIGIT METHOD
76. Life of an asset is 5 years, Purchase cost – Rs.
5,70,000, Installation charges – Rs. 30,000
Depreciation as per sum of years digit method
for 4th year = ?
(a) 1,60,000
(b) 40,000
(c) 2,00,000
(d) 80,000
77. 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 ………….
(a) 36,000
(b) 18,000
(c) 12,000
(d) 6,000
78. N Ltd. purchased a machinery on April 1, 2008
for Rs. 6,00,000. It is estimated that the
machinery will have a useful life of 5 years after
which it will have no salvage value. If the
company follows sum of year digit method of
depreciation, the amount of depreciation
charged during the year 2012-2013 was
……………
(a) Rs. 40,000
(b) Rs. 1,20,000
(c) Rs. 1,90,000
(d) Rs. 2,00,000
79. Under sum of year digit method depreciation
year by year ………….
(a) Increases
(b) Decreases
(c) Remains constant
(d) None of above
80. M/s NZ & Co. purchased a machine for Rs.
10,00,000. Estimated useful life and scrap value
were 10 years and Rs. 1,20,000 respectively.
The machine was put to use on 1.1.2001. If the
company follows sum of year digit method of
depreciation, the amount of depreciation
charged during the year 2007-2008 was
……….. & ………….
(a) 64,000 & 48,000
(b) 48,000 & 64,000
(c) 1,12,000 & 1,28,000
(d) 1,28,000 & 1,12,000
MACHINE HOUR RATE METHOD
81. Original cost = Rs. 2,01,600. Salvage value =
9,600. Depreciation for 2nd year by machine
hour rate method, if hours for 2nd year was
8,000 and total estimated hours are 80,000.
(a) Rs. 19,000
(b) Rs. 21,120
(c) Rs. 20,160
(d) Rs. 19,200
82. A new machine costing Rs. 1,00,000 was
purchased by a company on 1st April 2011. Its
useful life is estimated to be 5 years and scrap
value at Rs. 10,000. The production hours for
the next 5 years is as follows:
Year
Hours
2011-2012
5,000
2012-2013
10,000
2013-2014
12,000
2014-2015
20,000
2015-2016
25,000
Depreciation for year 2013-2014 = ?
(a) 25,000
(b) 15,000
(c) 12,500
(d) 6,250
83. Life of an asset is 5 years, Purchase cost : Rs.
6,70,000, Installation charges : Rs. 30,000,
Salvage value: Rs.50,000. Total estimated
hours machine will work for the 5 years – 25,000
hours. If machine works for 5,000 & 8,000 hours
in 1st & 2nd year, depreciation as per machine
hour rate method will be ………. & ………..
(a) 1,34,000 & 2,14,400
(b) 1,30,000 & 2,08,000
(c) 1,40,000 & 2,24,000
(d) 2,08,000 & 1,30,000
UNIT OF PRODUCTION METHOD
84. Original cost = Rs. 1,26,000. Salvage value =
6,000. Depreciation for 2nd year by units of
production method, if units produced in 2 nd year
was 5,000 and total estimated production
50,000.
(a) Rs. 10,800
(b) Rs. 11,340
(c) Rs. 12,600
(d) Rs. 12,000
85. Original cost = Rs. 7,50,000. Installation
charges = 1,00,000, Salvage value = 50,000.
Depreciation for 3rd year by units of production
Method, if units produced in 3rd year was 40,000
and total estimated production 2,00,000.
(a) Rs. 1,20,000
(b) Rs. 1,80,000
(c) Rs. 1,60,000
(d) Rs. 2,00,000
86. A new machine costing Rs. 2,75,000 was
purchased by a company on 1st April 2011. Its
useful life is estimated to be 5 years and scrape
value at Rs. 25,000. The production units for the
next 5 years is as follows:
Year
Units
2011-2012
10,000
2012-2013
15,000
2013-2014
35,000
2014-2015
40,000
2015-2016
50,000
Depreciation for the years 2012-2013 & 20142015 will be ……………… & ……………….
(a) 16,667 & 8,333
(b) 25,000 & 66,667
(c) 25,000 & 58,333
(d) 66,667 & 83,333
SINKING
FUND
FUND METHOD
METHOD/DEPRECIATION
On the basis of the information given below,
answer next 6 questions.
Z Ltd. purchased machine having life of 3 years
on 1st April 2008 for Rs. 50,000. It is decided to
provide for the replacement of the machine at the
end of 3 years by setting-up a Sinking fund.
Investment will fetch interest at 12% p.a. Sinking
fund tables shows that Rs. 0.296349 invested
each year will produce Rs. 1 at the end of 3
years at 12% p.a. The investments are sold for
Rs. 28,500.
87. Depreciation to be provided for each year = ?
(a) 16,666.67
(b) 14,817.45
(c) 6,371.50
(d) None of the above
88. Interest for the year ended 31st March 2010 = ?
(a) 1,778.04
(b) 3,769.44
(c) 1,578.04
(d) None of the above
89. Interest for the year ended 31st March 2011 = ?
(a) 1,778.04
(b) 3,769.44
(c) 1,578.04
(d) None of the above
90. Sinking Fund Investment Account balance for
the year ended 31st March 2010 = ?
(a) 14,817
(b) 31,412
(c) Nil
(d) None of the above
91. Sinking Fund Investment Account balance for
the year ended 31st March 2010 = ?
(a) 14,817
(b) 31,412
(c) Nil
(d) None of the above
92. Loss on sale of investment for the year ended
31st March 2011 = ?
(a) 1,778.04
(b) 2,912
(c) 3,769.44
(d) None of the above
ANNUITY METHOD
On the basis of the information given below,
answer next 9 questions.
NS Ltd. purchased a leasehold property on 1st
April 2010 for 5 years at a cost of Rs. 7,50,000. It
decided to write off the lease by annuity method
presuming the rate of interest at 14%. The
annuity table shows that annual amount
necessary to write off Rs. 1 in 5 years at 14% is
Rs. 0.291284. Calculations to be made to the
nearest rupee.
93. Depreciation to be provided for each year = ?
(a) 2,63,463
(b) 2,48,463
(c) 2,33,463
(d) 2,18,463
94. Interest for the year ended 31st March 2011 = ?
(a) 1,05,000
(b) 71,007
(c) 89,115
(d) None of the above
95. Interest for the year ended 31st March 2012 = ?
(a) 1,05,000
(b) 71,007
(c) 89,115
(d) None of the above
96. Interest for the year ended 31st March 2013 = ?
(a) 1,05,000
(b) 89,115
(c) 71,007
(d) 50,363
97. Interest for the year ended 31st March 2014 = ?
(a) 1,05,000
(b) 89,115
(c) 71,007
(d) 50,363
98. Balance of lease account for the year ended 31st
March 2011 = ?
(a) 6,36,537
(b) 5,07,189
(c) 3,59,733
(d) 1,91,633
99. Balance of lease account for the year ended 31st
March 2012 = ?
(a) 6,36,537
(b) 3,59,733
(c) 1,91,633
(d) 5,07,189
100. Balance of lease account for the year ended
31st March 2013 = ?
(a) 6,36,537
(b) 3,59,733
(c) 1,91,633
(d) 5,07,189
101. Balance of lease account for the year ended
31st March 2014 = ?
(a) 6,36,537
(b) 5,07,189
(c) 3,59,733
(d) 1,91,633
CHANGE IN METHOD OF DEPRECIATION
102. N Ltd. purchase machine for Rs. 4,75,000 on
1.1.2010 and spent Rs. 25,000 on its
installation. Rate of depreciation 10% on SLM.
Company charge depreciation on SLM up to
year ended 31.12.2014. In year 2015 the
company wants to change its method of
depreciation from SLM to WDV w.e.f. 1.1.2010.
To effect the change in method machinery
account will be …………….
(a) Credited by Rs. 45,245
(b) Debited by Rs. 45,245
(c) Credited by Rs. 42,983
(d) Debited by Rs. 42,983
On the basis of the information given below,
answer next 4 questions.
A firm, which depreciates its machinery at 10%
p.a. on WDV method, had on 1st April 2002 Rs.
9,72,000 in the debit of machinery account.
During the year ended 31st March 2003, a part
of the machinery purchased on 1st April 2000
and a new machinery at a cost of Rs. 1,50,000
was purchased and installed on the same date,
installation charges being Rs. 8,000. On 31st
March 2003, the firm decided to change its
method of charging depreciation from WDV
method to SLM with effect from April 2000, the
rate of depreciation remaining the same as
before.
103. Depreciation on machine sold up to 1.10.2002
in year 2002-2003 will be Rs. …………..
(a) Rs. 16,560
(b) Rs. 3,240
(c) Rs. 11,200
(d) Rs. 7,900
104. Loss on machine sold on 1.10.2002 in year
2002-2003 will be Rs. ………..
(a) Rs. 16,560
(b) Rs. 3,240
(c) Rs. 11,200
(d) Rs. 7,900
105. Extra depreciation due to change in method
will be …………….
(a) Rs. 16,560
(b) Rs. 3,240
(c) Rs. 11,200
(d) Rs. 7,900
106. Closing balance of machinery account will be
Rs. ……….
(a) Rs. 9,61,800
(b) Rs. 9,45,240
(c) Rs. 9,42,000
(d) Rs. 9,34,100
Question No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
Answers
(d)
(d)
(b)
(b)
(c)
(a)
(b)
(c)
(c)
(b)
(d)
(a)
(c)
(d)
(d)
(b)
(d)
(c)
(d)
(a)
(d)
(d)
(d)
(d)
(b)
(c)
(d)
(a)
(b)
(c)
(d)
(d)
(a)
(c)
(b)
(b)
(d)
(d)
(c)
(b)
(b)
(c)
43.
44.
45.
46.
47.
48.
49.
50.
51.
52.
53.
54.
55.
56.
57.
58.
59.
60.
61.
62.
63.
64.
65.
66.
67.
68.
69.
70.
71.
72.
73.
74.
75.
76.
77.
78.
79.
80.
81.
82.
83.
84.
85.
86.
87.
88.
89.
90.
91.
92.
93.
94.
95.
96.
97.
98.
99.
100.
101.
102.
103.
104.
105.
106.
(c)
(c)
(d)
(b)
(a)
(c)
(d)
(d)
(d)
(b)
(a)
(d)
(b)
(b)
(a)
(a)
(b)
(c)
(b)
(b)
(b)
(b)
(b)
(a)
(d)
(b)
(d)
(c)
(a)
(d)
(d)
(a)
(b)
(d)
(a)
(a)
(b)
(a)
(d)
(b)
(b)
(d)
(c)
(b)
(b)
(a)
(b)
(b)
(c)
(b)
(d)
(a)
(c)
(c)
(d)
(a)
(d)
(b)
(d)
(b)
(b)
(a)
(c)
(d)