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11th Accountancy Monthly Test - 2 ( Depreciation Accounting)

MABS Institution

11th Accountancy Monthly Test - 2 ( Depreciation Accounting)-Aug 2020

Time : 2.30 Hours

Part - A

Multiple Choice Question - Answer All Question

_________ is a non-depreciable asset.

Building
Machinery
Land
Vehicle

Under which method of depreciation, interest is also taken into consideration?

Revaluation method
Depletion method
Annuity method
None of the above

Under which depreciation method the amount of depreciation expenses remains same throughout the useful life of a fixed asset__________.

Straight Line Method
Reducing Balance Method
Number of Units produced method
Machine hour method

Residual value of an asset means the amount that it can fetch on sale at the ____________of its useful life

Beginning
End
Middle
None

The time period for which an asset can be used efficiently is known as ____________ of an asset.

Scrap Value
Estimated useful life
Original Cost
None of these

Sinking Fund is also known as

Depletion Method
Annuity method
Depreciation Fund method
None of the above

Under the written down value method of depreciation, the amount of depreciation is

Uniform in all the years
Decreasing every year
Increasing every year
None of the above

Depreciation is provided on

Fixed assets
Current assets
Outstanding charges
All assets

The book value of machinery on 01.04.2016 was Rs. 70, 000. Depreciation is charged at I0% p.a under Written Down value method on 31st March every year. The machine was sold for Rs. 50, 000 on 01.8.2017; calculate the Profit/Loss on sale of machinery.

Profit Rs. 5,755
Profit Rs. 5,000
Profit Rs.10,375
Loss Rs. 10,325

Loss on sale of a fixed asset will appear on the _____________

Credit side of depreciation account
Debit side of fixed asset account
Credit side of fixed asset account
Debit side of depreciation account

Part - B

Generic 2 - Answer All Question

Furniture was purchased for Rs 60,000 on 1-7-2016. It is expected to last for 5 years. Estimated scrap at the end of five years is Rs 4,000. Find out the rate of depreciation under straight line method.

A Company purchased a plant for Rs1,00,000. The useful life of the plant,is 5 years and the residual value is Rs 10,000. Find out the rate of depreciation under fixed percentage on' original cost method.

Calculate the reate of depreciation under straight line method.

Particulars Rs

Purchase price of a Machine 80,000

Installation charges 20,000

Estimated scrap value 40,000

Expected useful life 4 years

What is scrap value of an asset?

From the following particulars find out the rate of depreciation under Straight line method.
Cost of Fixed Asset Rs 50,000
Residual Value Rs 5,000
Estimated life 10 years

John uses.his business car for his personal-use also. During the financial year ended 2015-16, the car was used to travel for 20,000 kms, out fwhich 5,000 kms was for her personal use. The cost of the car is Rs 40,000 and it is to be depreciated @l 5% per annum on straight line method. The car was purchased on 1^st July, 2015. Compute the amount of depreciation to be charged to profit ;lnd loss account and pass the entry for it.

What do you mean by a depreciable asset?

Part - C

Generic 3 - Answer All Question

Calculate the rate of depreciation under straight line method.
Purchase price of a machine Rs 80,000
Expenses to be capitalised Rs 20,000
Estimated residual value Rs 4,000
Expected useful life 4 years

On 1st April 2015, Kumar purchased a machine for Rs.80,000 and spent Rs.20,000 on its installation. The residual value at the end of its expected useful life of 8 years is estimated at Rs.4,000. On 30th September 2017, the machine is sold for Rs.50,000. Depreciation is to be provided according to straight line method. Prepare Machinery Account. Accounts are closed on 31st December every year.

Write a short note on - Revaluation Method :

A furniture costing Rs 5,000 has been purchased on 1.1;2011,the installation charges being Rs 1,000. The furniture is to be depreciated @10% p.a on the diminishing balance method. Show the furniture account and depreciation account for the first three years.
Write a note on sum of years of digits method.

Write a short note on Machine hour rate method.

State the advantages and limitations of written down value method of depreciation.

Part - D

Generic 5 - Answer All Question

On 1st January 2015, a second hand machine was purchased for Rs 58,000 and Rs 2,000 was spent on its repairs. On 1st July 2017, it was sold for Rs 28,600. Prepare the machinery account for the years 2011 to 2013 under written down value method by assuming the rate of depreciation as 10% p.a. and the accounts are closed on 31st December every year.

Michel & Co., purchased a Second hand Plant for Rs 4,70,000 on 1^stJuly 2001. They spent Rs30,000 on the repairs and installed the Plant. Depreciation is written off at 10% p.a. on the Straight line method. On 30^th September 2003, the Plant was found to be unsuitable and sole for Rs 3,50,000.
Prepare Plant account and Depreciation account for three years assuming that the accounts are closed on 31^st March.every year.

A firm purchased a machine for Rs 1,00,000 on 1-7-2015. Depreciation is written off at 20% on reducing balance method. The firm closes its books on 31st December each year. Show the machinery account upto 31-12-2017.

Raj & Co purchased a machine on 1st January 2014 for Rs 90,000. On 1st July 2014, they purchased another machine for Rs 60,000. On 1st January 2015, they sold the machine purchased on 1st January 2014 for Rs 40,000. It was decided that the machine be depreciated at 10% per annum on diminishing balance method. Accounts are closed on 31st December every year. Show the machinery account for the years 2014 and 2015.

Anand bought a machinery for Rs.1,00,000 on 1-1-2015. On 1-6-2016, he bought another machine for Rs.50,000. On 1-10-2017, he purchased another machine for Rs.20,000. Provide depreciation at 10% p.a. on straight line method. Prepare machinery account for the years 2015 to 2017 by using accounts by assuming accounts are closed on 31st December every year.

Ragul purchased machinery on April 1, 2014 for Rs 2,00,000. On 1st October 2015, a new machine costing Rs 1,20,000 was purchased. On 30th September 2016, the machinery purchased on April 1, 2014 was sold for Rs 1,20,000. Books of accounts are closed on 31st March and depreciation is to be provided at 10% p.a. on straight line method. Prepare machinery account and depreciation account for the years 2014-15 to 2016-17:

M/s Ramco textile mills purchased machinery on 1st April 2014 for Rs.2,00,000 on credit from M/s. Nila & Co. and spent Rs.10,000 on its installation. Depreciation is provided at 10% per annum on the written down value method. Prepare machinery account and depreciation account for the first three years. Books are closed on 31st March every year.

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