# Depreciation MCQ Commerce

50 Questions 30 Mins

Following are some of the multiple choice questions on the Depreciation with answers that will help the students in developing their knowledge.

## Depreciation MCQ

• 4500
• 4000
• 5000
• 2000

### 2. Depreciation under fixed instalment method is calculated-

• On the purchase price of asset
• On the closing balance of asset
• On each year’s opening balance of the asset
• on the market price of asset

### 3. Your shiny new boat cost \$7650. The depreciation for your boat is 14% per year. Estimate the value of your vehicle in 3 years. What is the equation that models this problem?

• y= 7650(.14)3
• y= 7650(.86)3
• y= 7650(1+.86/1)3*1

### 4. Ashley's parents bought a house in 2009 for \$118,000. The home's value increases at a rate of 9% annually. How much will the house be worth in 2018? In 2020?

• \$256,283; \$304,490
• \$280,778; \$304,490
• \$256,283; \$374,505
• \$190,245; \$225,680

### 5. What is the one asset that can NEVER be depreciated?

• Financing Costs
• Land
• Deferred Financing Cost
• Land Improvements

### 6. An asset whose life will extend over more than one accounting period is called a

• liability
• current asset
• non current asset
• non current liability

• ₹ 3,50,000
• ₹ 2,50,000
• ₹ 2,00,000
• ₹ 3,00,000

### 8. Your shiny new boat cost \$7650. The depreciation for your boat is 14% per year. Estimate the value of your vehicle in 3 years. What is the answer?

• \$20.99
• \$49,226.64
• \$11,333.81
• \$4865.82
• None of these

• \$4000
• \$4400
• \$8000
• \$7600

### 10. Residual value of the asset means:

• The price paid on the purchase of asset
• The amount realised on the sale of asset
• The net amount expected to realise on final disposal of assets
• Reduced value of the asset every year

• \$62,000
• \$84,000
• \$76,000
• \$96,000

### 12. The net book value of assets is obtaining by deducting _______ with accumulated depreciation.

• depreciation
• market value
• percentage of depreciation
• cost

### 13. The value of asset recorded in the statement of financial position is at

• cost
• market value
• net book value
• cost plus accumulated depreciation

### 14. Depreciation is defined as: allocation of __________of non-current asset over its ______________________.

• selling price remaining life
• costuseful life
• costremaining life
• selling priceuseful life

### 15. Salem has a population of 15,000 and depreciates at a rate of 8% per year. What is the exponential equation?

• P = 15,000(-.92)t
• P=15,000(1.08)t
• P=15,000(0.92)t
• P=15,000(.08)t

• 14327
• 4309
• 839
• 7680

• y=5000(0.7)x
• y=30(5000)x
• y=5000(1.3)x
• y=5000xx

• \$23,219.72
• \$136.72
• \$51,710.94
• \$16,710.94

### 19. The original cost of a plant asset minus accumulated depreciation. (p. 451)

• current assets
• plant assets
• salvage value
• book value of a plant asset

### 20. The total amount of depreciation expense that has been recorded since the purchase of a plant asset is called

• book value.
• accumulated depreciation.
• salvage value.
• net realizable value.

### 21. A milling machine was bought for \$200,000 and has accumulated depreciation of \$65,000. On February 20th, the company disposed of the machine receiving nothing in return. How would you record the loss on the disposal of the milling machine?

• \$65,000
• \$70,000
• \$135,000
• No loss on the disposal

### 22. The loss of an asset's value is...

• depreciation
• data processing
• book value
• liability value

### 23. Which fixed asset is LEAST likely to lose its value over time?

• land
• equipment
• buildings
• new delivery van

### 24. To calculate book value of an asset...

• original value times the amount of depreciation
• amount of depreciation divided by current value
• original value minus amount of depreciation
• original value divided by depreciation per year

• True
• False

### 26. Calculating the estimated annual depreciation expense based on the amount of production expected from a plant asset.

• units-of-production method
• declining-balance-depreciation
• straight-line-depreciation
• salvage value

### 27. Recording an equal amount of depreciation expense for a plant asset in each year of its useful life.

• units-of-production method
• straight-line-depreciation
• salvage value
• real property

### 28. The amount that will be received for an asset at the time of its disposal.

• straight-line-depreciation
• units-of-production method
• assessed value
• salvage value

### 29. Land and anything attached to it; also called real estate.

• assessed value
• real property
• personal property
• units-of-production method

### 30. Cash and other assets expected to be exchanged for cash or consumed within a year.

• loss on plant asset
• current asset
• gain on plant asset
• modified half-year convention

### 31. A type of accelerated depreciation that multiplies the book value of an asset by a constant depreciation rate to determine annual depreciation.

• declining-balance-depreciation
• assessed value
• Modified Accelerated Cost Recovery System (MACRS)
• straight-line-depreciation

### 32. The decrease in the value of a plant asset because of the removal of a natural resource.

• salvage value
• loss on plant asset
• depletion
• gain on plant asset

### 33. Revenue that results when a plant asset is sold for more than book value.

• gain on plant asset
• loss on plant asset
• salvage value
• plant asset record

### 34. A method that recognizes one half of a year's depreciation in the year of acquisition.

• personal property
• straight-line-depreciation
• modified half-year convention
• half-year convention

### 35. The loss that results when a plant asset is sold for less than book value.

• salvage value
• loss on plant asset
• units-of-production method
• real property

### 36. The tax rate used to calculate property taxes.

• loss on plant asset
• plant asset record
• salvage value
• milage rate

### 37. A depreciation method required by the Internal Revenue Service to be used for income tax calculation purposes for most plant assets.

• units-of-production method
• Modified Accelerated Cost Recovery System (MACRS)
• personal property
• straight-line-depreciation

### 38. A method that recognizes a full year's depreciation if the asset is acquired in the first half of the year.

• modified half-year convention
• straight-line-depreciation
• salvage value
• units-of-production method

### 39. All property not classified as real property.

• personal property
• real property
• salvage value
• units-of-production method

### 40. An accounting form on which a business records information about each plant asset.

• salvage value
• units-of-production method
• plant asset record
• loss on plant asset

### 41. The value of an asset determined by tax authorities for the purpose of calculating taxes.

• assessed value
• book value of a plant asset
• depletion
• gain on plant asset

### 42. The original cost of a plant asset minus accumulated depreciation.

• assessed value
• half-year convention
• current asset
• book value of a plant asset

### 43. Depreciation is the process of -

• Valuation of asset
• Allocation of the cost of asset
• Valuation and allocation of the cost of asset
• None of the above

### 44. Main objective of charging depreciation is-

• Ascertaining true profit or loss
• Ascertaining true financial position
• Ascertaining true cost of production
• All of the above

### 45. Depreciation arises due to -

• Fluctuations
• Fall in the value of money
• Temporary fall in the market value of asset
• Physical Wear and tear

### 46. Depreciation is provided on -

• Current assets
• Fictitious assets
• Fixed assets
• Intangible assets

### 47. Factors taken into consideration for providing depreciation are -

• Total cost of assets
• Estimated useful life of the asset
• Estimated scrap value of the asset
• All of the above

### 48. Depreciation arises because of -

• Obsolescence
• Constant use of assets
• expiry of time
• All of these

### 49. Characteristic of a depreciation is -

• Decline in the value of assets
• Depreciation is a permanent nature
• Depreciation is a known case expense
• All of these

• 9.8%
• 15.76%
• 20.36%
• 34.36%