About Depreciation

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

Depreciation MCQ

1. Under straight line method if the cost of asset is 45000 and scrap value is 5000 anduseful life is 10 year, then the amount of depreciation will be:

  • 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

7. A machinery costing ₹ 5,00,000 is depreciated @ 20% p.a. at straight line method. At the end of three years, the book value of the machinery will be :

  • ₹ 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

9. Find the amount of depreciation chargeable under the straight line method for the second year if amount for first year is $4,000

  • $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

11. What will be the amount of depreciation of plant for fifth year as per straight line method when original cost of plant $1,000,000; Salvage value $40,000 , Expected useful life 10 years?

  • $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

16. A population of fish starts at 8,000 and decreases by 6% per year. What is the population of fish after 10 years?

  • 14327
  • 4309
  • 839
  • 7680

17. Suppose a culture of bacteria begins with 5000 cells and dies by 30% each year. Write an equation that represents this situation.

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

18. Daniel’s Print Shop purchased a new printer for $35,000. Each year it depreciates at a rate of 5%. How much will the printer be worth in 8 years?

  • $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

25. Because of land’s permanent nature, it is not subject to depreciation.

  • 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

50. S=RM2,000C=RM25,000n=6 yearsFind the annual rate of depreciation using the reducing balance method.

  • 9.8%
  • 15.76%
  • 20.36%
  • 34.36%

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