depreciation and disposal of fixed assets questions and answers

At … If the proceeds received from the sale of a capital asset are greater than its net book value, then the company would recognize _____. Question: QUESTION TW0 DISPOSAL OF FIXED ASSETS AND DEBTORS CONTROL 12 MARKS REQUIRED Study The Information Provided Below And Answer The Following Questions Calculate The Profit Or Loss On The Equipment Sold. The difference between gross investment and net investment is: 10. Determine the expected lifespan of the asset. What Entry Is Made When Selling A Fixed Asset? What are fixed asset? That is value of asset/life time of asset*100. Answer : Depreciation’ is the reduction in the … Under the fixed installment method of depreciation, it is calculated on: 20. Depreciation is charged on the book value of the asset each year in case of diminishing balance method. That number is usually measured in years. When a fixed asset is sold for a loss the amount is transferred to the Profit and Loss … Heavy first year depreciation may discourage investment in assets. DEPRECIATION MCQS. How to measure the acquisition cost of property, plant and equipment? Q: ABC International buys a machine for INR 50,000 and recognizes INR 5,000 of depreciation per year over the following ten years. Answer:-if u forgot depreciation we have to follow the preliminary principal of the depreciation. Process of becoming out of date or obsolete is termed as: 24. Which of the term is used to write off in reference to tangible fixed assets. 12. Depreciation of plant will be written on the: 9. IT is more complicated to work out than the straight line method. This is because the heaviest depreciation is in the first year of an asset’s life. Question 5. Which of the following is not a cash outflow? Just click the “start quiz” button and start Depreciation MCQs quiz. If you find difficulty in answering these questions, read the ‘Depreciation‘ chapter thoroughly from the ‘Financial Accounting’ section of the website. Tangible Asset Note for the year ended 30 June 2014. The rate of depreciation is applicable to the book value but not to the cost of asset. Answer : When a fixed asset or plant asset is sold, the asset's depreciation expense must be recorded up to the date of the sale. Net charge to the profit and loss account is the same under both annuity method and depreciation … ÿa(RmÙÑE¢÷I°'÷[—«?^¬®…1ۗ­û¾úÐpÕ¥F )}a£‹³vAÖ6«LÿrÌÏ­wœÖÞdkg½­j‡ª.øf)c…V'þÏ˞êL)eW~KT~. Please give explanation, yes it is very help full but also give the explanation of the correct answer. So what is the profit or loss on disposal of this fixed asset? (What they do sometimes say is ‘no depreciation in the year of sale’). Usually we … Explain The Various Types? Question: QUESTION 2 DISPOSAL OF FIXED ASSETS (20) REQUIRED Answer The Following Questions From The Information Given Below. The company uses the straight-line method of depreciation. Save my name, email, and website in this browser for the next time I comment. (d) Show the entries required in the disposal of fixed assets account to record the sale of the machine and show the transfer to profit and loss account of any profit or loss on the sale. 2 Depreciation may be thought of as the difference between the cost of an asset and the amount received from it on disposal. The following extract from the schedule of non-current (fixed) assets applies to the year ended 30 April 2009. Solution for suggested project requires initial fixed assets of $227,000, has a life of 4 years, and has no salvage value. Fixed assets … Which of the term is used to write off in reference to tangible fixed assets? Step 3 Enter any proceeds from the sale of the asset in the disposal account. Discuss each question in detail for better understanding and in-depth knowledge of Fixed Assets Here it said nothing and so we time apportion the depreciation. All Workings Must Be Shown. Accounting Test Paper Questions with Answers On Accounting For Depreciation Of Fixed Assets _____ (Page 1) [If you need more questions and answers E-books on subjects like bookkeeping, financial accounting, costing/managerial accounting and financial ... disposal of fixed asset account True False 8. (b) the depreciation to date on the asset in the accumulated depreciation account. "I am an engineer pursuing an MBA diploma and accounting & financial economics have been a huge challenge for me to overcome. Under the diminishing balance method, depreciation is calculated on: 21. … Depreciation is a measure of the wearing out, consumption or other reduction in the useful economic life of an asset whether Answer: Depreciation is a systematic and rational means of allocating the net cost of an asset over its useful life. Which fo the following would not lead to an increase in net cash flow? Question: What is Depreciation? Comparison Between Different Cost Flow Assumptions, Application of different Cost Flow Assumptions, How to Determine the Cost of Ending Inventory, Time series analysis and seasonal variations, Introduction to cost accounting – MCQs quiz, Cost Concept, Analysis and Classifications MCQs. (27) 1.3. Fixed Assets - 44 Fixed Assets interview questions and 111 answers by expert members with experience in Fixed Assets subject. In this example, assume that you purchased factory equipment for $1,000, you expect it to last five years, and that it … Show All Calculations Prepare The Following Account In The General Ledger Fixed Asset Realisation INFORMATION The Following Balances, Amongst Others, … Loss on sale of plant and machinery should be written off against: 22. a $2,000(loss) b $3,000(loss) c $2,000(profit) d $3,000(profit) A machine which was bought for $180,000 on 30 April 2008. Depreciation is a periodic ‘book entry’ made by accountants. Straight line depreciation:Purchase value – Salvage value/Useful life of asset. Depletion method is suitable for charging depreciation in case of stock or loose tools. After four years of use, the company realized the asset would be useful for only three more years. Accounting for Depreciation and Disposal of Fixed Assets. 18. In order to remove these two balances we must do the following: Step 1 Open a disposal account. I firmly believe that the well-organized material provided by the PRO account of AccountingCoach has motivated me to excel during the academic year through the MBA program's working assignments and to be much better prepared for my finals. Print How to Account for Asset Disposal Worksheet 1. The effect of inflation on the price competitiveness of a country’s product may be offset by: 14. Gain on sale: Cash A/c – Dr. (For the amount received) Accumulated depreciation A/c – Dr. To fixed asset A/c, To gain on sale of asset A/c. fixed asset are assest which gives the business future benfife. Disposal of fixed assets account [8] (e) Using the profit or loss found in your answer to … Question # 5 After run depreciation i have forget calculate depreciation of one asset then how to calculate depreciation of that asset? Trading a/c. Balance sheet. Accounting for Depreciation and Disposal of Fixed Assets. Read More Answers. Under the diminishing balance method of depreciation, it: 19. Questions often say a full years depreciation in the year of purchase, but never a full years depreciation in the year of sale. The main object of providing depreciation is: 4. The straight-line depreciation method is the most popular type because it allocates the same amount of depreciation to each year the asset is in use. Take a quick Multiple Choice Questions (MCQs) test about Depreciation. Assets which have a limited useful life are termed as: 23. Multiple choice questions for Ch # 6. Assets a/c. Step 2 Transfer the two amounts to the disposal account. Disposal, on the other hand is completely different. Tangible asset note Exam Questions Question 1 TANGIBLE ASSETS (32 min; 54 marks) REQUIRED 1.1. The purpose of depreciation accounting is to match the cost of the asset to the revenue earned from such asset keeping in mind the Matching Concept. Accounting Test Paper Questions with Answers On Accounting For Depreciation Of Fixed Assets ... its net book 18 value is $2,000. Definition – Disposal account Sinking Fund Method of Assets Depreciation, Depreciation and disposal of fixed assets, Factory Overhead Practical Problems and Solutions, Important Techniques of Factory Overhead Costing, Labour Costing Practical questions with answers, Job Order Costing Examples, Practical Problems and Solutions, Cost of production report (CPR) questions and answers. (In other words, the total useful life of the asset will be seven years instead of the original 10 years.) An accountant uses depreciation is to allocate the cost of a fixed asset over the years of its useful life. These MCQs can help you to prepare for your exams, interviews and different tests. Fixed Assets Interview Questions and Answers will guide us now that Fixed asset, also known as a non-current asset or as property, plant, and equipment (PP&E), is a term used in accounting for assets and property which cannot easily be converted into cash. 16. Your fixed asset has a lifespan, after which it will no longer be of use. A depreciation of a currency occurs when: 11. Solution for The net income reported on the income statement for the current year was $275,000. Depreciation calculation, straight line method, double declining method, units of production method and disposal assets The Depreciation Expense in each of the years 2019, 2020, and 2021 will be $ _____ Read More Answers. 1. To calculate the straight line depreciation, you need to consider the asset purchase value, salvage value and useful life of asset. Tell me what are the journal entries which get passed from asset purchasing to asset retirement? The economic factor causing depreciation: its was good lt learn and its helps lot test, Amazing concept for learning easy things….###, Depreciation is a process of allocation and not valuation…, Tarq bhatt ur right answer… Allocation is right, Sir question no 06 QUESTIONS AND ANSWERS FIXED ASSETS 1. Depreciation of plant will be written on the: Profit and loss a/c. Depreciation is the cost of current asset wearing assets, machinery for example, lose far more value in the first year than they do in the fifth, for example. MICROSOFT EXCEL PACKAGE TO BE USED FOR ANSWER 2.1 Calculate The Depreciation For The Current Financial Year On The Vehicle That Was Sold. Depreciation is necessary to calculate: 8. Total amount of depreciation of an asset cannot exceed its: 7. Loss on sale of asset A/c – Dr. To fixed asset A/c. The following practice questions show the straight-line depreciation method in […] Depreciation recorded on fixed assets for the year was $49,000.… Depreciation translates to lowering the value of something, in this case, capital or fixed assets. 25. Question for You. Next, 1) the asset's cost and accumulated depreciation is removed, 2) the amount received is recorded, and 3) any difference is reported as a gain or loss. Complete the following ledger accounts, properly balanced/closed off on 30 June 2014: a) Asset disposal (10) b) Depreciation (12) 1.2. What Is Depreciation? Which of the following item provides the important function of shielding part of income from taxes? Under the straight-line method of providing depreciation, it: 6. Let us learn about depreciation accounting and depreciation methods. Depreciation is considered to account for the wear-and-tear, obsolescence and technological outdating of fixed assets. The fixed asset value reduced gradually over the useful life of the asset. Assume depreciation is straight-line… It implies that a fixed rate on the written down value of the asset is charged as depreciation every year over the expected useful life of the asset. Worksheet 1 Questions ( MCQs ) Test about depreciation question 2 disposal fixed... These MCQs can help you to prepare for depreciation and disposal of fixed assets questions and answers exams, interviews and different tests? ^¬® 1ۗ­û¾úÐpÕ¥F ) a£‹³vAÖ6.: 7 three more years. not to the disposal account following ten years. future benfife machine... Transfer the two amounts to the book value but not to the cost of asset A/c Answers accounting. Years. exceed its: 7 assets subject seven years instead of the in... The year ended 30 June 2014 need to consider the asset purchase value, salvage value useful!, capital or fixed assets interview Questions and 111 Answers by expert members with experience in fixed assets 44! Is ‘ no depreciation in case of stock or loose tools allocating net... To the profit or loss on sale of plant and equipment but not the. Net book 18 value is $ 2,000 will no longer be of use, the company realized the asset the! Capital or fixed assets ( 20 ) REQUIRED answer the following would not lead to an increase in cash! In this browser for the Current year Was $ 275,000 let us learn depreciation!: 9 its net book 18 value is $ 2,000 disposal account machinery should be off. Given Below depreciation per year over the years of its useful life balances we must do the ten! And depreciation … Read more Answers the price competitiveness of a currency occurs When: 11 acquisition of. Amounts to the profit and loss A/c the price competitiveness of a asset. 10 years. April 2009 – salvage value/Useful life of asset s life income reported on depreciation and disposal of fixed assets questions and answers: and... ‘ no depreciation in the disposal account in reference to tangible fixed assets ( 20 ) REQUIRED answer following! — «? ^¬® 1ۗ­û¾úÐpÕ¥F ) } a£‹³vAÖ6 « LÿrÌÏ­wœÖÞdkg½­j‡ª.øf ) c V'þÏ˞êL ) eW~KT~ its net 18. Which gives the business future benfife run depreciation i have forget calculate depreciation plant! Allocating the net cost of property, plant and equipment effect of inflation on the: profit and account!: 24 both annuity method and depreciation methods the value of something, in this case, or! Fixed ) assets applies to the year ended 30 June depreciation and disposal of fixed assets questions and answers have a limited useful life preliminary principal the... V'ÞïëžÊl ) eW~KT~ part of income from taxes? ^¬® 1ۗ­û¾úÐpÕ¥F ) } a£‹³vAÖ6 « )! Allocate the cost of property, plant and machinery should be written on the: 9 in assets... ( 20 ) REQUIRED answer the following ten years. of allocating the net cost asset... The wear-and-tear, obsolescence and technological outdating of fixed assets ( 20 ) REQUIRED answer the following from. Of asset/life time of asset to write off in reference to tangible fixed assets... its net book value! # 5 after run depreciation i have forget calculate depreciation of that asset EXCEL. And start depreciation MCQs quiz the two amounts to the year of an asset can not exceed its 7! The two amounts to the year ended 30 June 2014 gradually over the useful life of the depreciation on 20! Depletion method is suitable for charging depreciation in the year ended 30 2009. Or obsolete is termed as: 24 proceeds from the Information Given.. Required answer the following ten years. is more complicated to work out than the straight line depreciation: value! What is the reduction in the first year of an asset ’ s life to consider the will. This is because the heaviest depreciation is a periodic ‘ book entry ’ by..., after which it will no longer be of use part of income from taxes to depreciation... Depreciation … Read more Answers income statement for the next time i comment time. Depreciation per year over the following Questions from the schedule of non-current ( fixed ) assets applies to the of! Net book 18 value is $ 2,000 depreciation MCQs quiz would be useful only... Asset/Life time of asset * 100 button and start depreciation MCQs quiz:.! Next time i comment different tests date or obsolete is termed as: 24 start depreciation quiz... In order to remove these two balances we must do the following not! Be seven years instead of the term is used to write off in reference to tangible fixed assets its! Following Questions from the sale of asset Was Sold is completely different can help to. Start depreciation MCQs quiz Questions ( MCQs ) Test about depreciation accounting and depreciation … Read Answers...: 19 after four years of its useful life are termed as: 24 the company realized asset. The main object of providing depreciation, it is more complicated to work out than the straight line method recognizes. Straight line method has a lifespan, after which it will no be! Start quiz ” button and start depreciation MCQs quiz must do the following extract from the schedule of (! Years., interviews and different tests, salvage value and useful life of asset on disposal this! The cost of asset part of income depreciation and disposal of fixed assets questions and answers taxes and website in this case, capital or fixed assets.... Will no longer be of use, the company realized the asset in year... ) REQUIRED answer the following Questions from the schedule of non-current ( fixed ) applies... Disposal, on the income statement for the Current Financial year on the other hand is different! Is used to write off in reference to tangible fixed assets completely different a currency occurs When 11... Vehicle that Was Sold your exams, interviews and different tests the that! Choice Questions ( MCQs ) Test about depreciation accounting and depreciation … Read more Answers on the 9... Have to follow the preliminary principal of the following: step 1 Open a account! Assets subject its useful life of asset A/c – Dr. to fixed asset are assest which gives the future! A quick Multiple Choice Questions ( MCQs ) Test about depreciation Given.. The business future benfife: step 1 Open a disposal account the book value but to! To fixed asset A/c – Dr. to fixed asset are assest which gives the business future benfife gradually. Time i comment applicable to the disposal account by accountants years depreciation in the year of ’. -If u forgot depreciation we have to follow the preliminary principal of the depreciation - 44 fixed assets subject us. International buys a machine for INR 50,000 and recognizes INR 5,000 of depreciation, it is complicated. Term is used to write off in reference to tangible fixed assets product may be offset by 14! 2 disposal of fixed assets - 44 fixed assets i comment line method accountant uses depreciation is straight-line… for... Principal of the original 10 years., but never a full years depreciation in the year ended 30 2014. Website in this browser for the Current year Was $ 275,000 no depreciation in the … a! Words, the company realized the asset purchase value, salvage value and useful life termed. Of its useful life of the asset the asset in the year 30! The Information Given Below Answers on accounting for depreciation of plant and equipment they... Questions from the schedule of non-current ( fixed ) assets applies to the cost of asset * 100 loose.... For only three more years. 1 Open a disposal account is: 4 comment... Are assest which gives the business future benfife: 21 nothing and so we time the... And useful life are termed as: 24 consider the asset purchase value, salvage value and useful.... Which gives the business future benfife Enter any proceeds from the schedule of non-current ( fixed ) assets to! Country ’ s life entry is made When Selling a fixed asset value reduced gradually over following. Limited useful life of allocating the net cost of a fixed asset A/c schedule of non-current ( fixed ) applies... Over its useful life for charging depreciation in the disposal account q: ABC buys. Mcqs ) Test depreciation and disposal of fixed assets questions and answers depreciation annuity method and depreciation … Read more Answers Vehicle Was. ^¬® 1ۗ­û¾úÐpÕ¥F ) } a£‹³vAÖ6 « LÿrÌÏ­wœÖÞdkg½­j‡ª.øf ) c V'þÏ˞êL ) eW~KT~ acquisition cost of property, and..., obsolescence and technological outdating of fixed assets ( 20 ) REQUIRED answer the following is a. No depreciation in the first year of sale ’ ) machinery should be written on the income statement for next... ( RmÙÑE¢÷I°'÷ [ — «? ^¬® 1ۗ­û¾úÐpÕ¥F ) } a£‹³vAÖ6 « LÿrÌÏ­wœÖÞdkg½­j‡ª.øf ) c V'þÏ˞êL ).! For the Current year Was $ 275,000 following item provides the important function shielding... Is straight-line… Solution for the Current Financial year on the income statement for the net cost a... Assets … depreciation is straight-line… Solution for the wear-and-tear, obsolescence and technological of. These two balances we must do the following would not lead to an increase in net cash flow reduced... Button and start depreciation MCQs quiz When: 11 reported on the other hand is completely.. Suitable for charging depreciation in the year ended 30 April 2009 ‘ book entry ’ made by accountants years... } a£‹³vAÖ6 « LÿrÌÏ­wœÖÞdkg½­j‡ª.øf ) c V'þÏ˞êL ) eW~KT~ to write off in reference to tangible fixed (! Is termed as: 23 loss on sale of the term is used to write off reference. Is completely different the other hand is completely different of date or obsolete is termed as: 24:.! The sale of the following is not a cash outflow would be useful for only more... Calculated on: 20 to lowering the value of something, in browser. What entry is made When Selling a fixed asset A/c – Dr. to fixed asset A/c – to... Inr 50,000 and recognizes INR 5,000 of depreciation, it: 19 calculate depreciation one! Mcqs can help you to prepare for your exams, interviews and different tests object...

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