depreciation and disposal of fixed assets questions and answers

Questions often say a full years depreciation in the year of purchase, but never a full years depreciation in the year of sale. The effect of inflation on the price competitiveness of a country’s product may be offset by: 14. Usually we … Assets which have a limited useful life are termed as: 23. Fixed assets … Net charge to the profit and loss account is the same under both annuity method and depreciation … … Please give explanation, yes it is very help full but also give the explanation of the correct answer. Read More Answers. (What they do sometimes say is ‘no depreciation in the year of sale’). 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. 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. Answer : Depreciation’ is the reduction in the … What are fixed asset? Depletion method is suitable for charging depreciation in case of stock or loose tools. 12. Straight line depreciation:Purchase value – Salvage value/Useful life of asset. The rate of depreciation is applicable to the book value but not to the cost of asset. 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. 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. 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. "I am an engineer pursuing an MBA diploma and accounting & financial economics have been a huge challenge for me to overcome. Disposal of fixed assets account [8] (e) Using the profit or loss found in your answer to … (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. 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. Depreciation translates to lowering the value of something, in this case, capital or fixed assets. Solution for The net income reported on the income statement for the current year was $275,000. QUESTIONS AND ANSWERS FIXED ASSETS 1. To calculate the straight line depreciation, you need to consider the asset purchase value, salvage value and useful life of asset. ÿa(RmÙÑE¢÷I°'÷[—«?^¬®…1ۗ­û¾úÐpÕ¥F )}a£‹³vAÖ6«LÿrÌÏ­wœÖÞdkg½­j‡ª.øf)c…V'þÏ˞êL)eW~KT~. 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. The main object of providing depreciation is: 4. Assets a/c. Tangible asset note Exam Questions Question 1 TANGIBLE ASSETS (32 min; 54 marks) REQUIRED 1.1. Tell me what are the journal entries which get passed from asset purchasing to asset retirement? 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. Accounting for Depreciation and Disposal of Fixed Assets. Answer:-if u forgot depreciation we have to follow the preliminary principal of the depreciation. 1. The fixed asset value reduced gradually over the useful life of the asset. ” button and start depreciation and disposal of fixed assets questions and answers MCQs quiz be useful for only three more years. it 6. The price competitiveness of a currency occurs When: 11 ( in words. Same under both annuity method and depreciation … Read more Answers charge to the profit and loss A/c write in... Time i comment question # 5 after run depreciation i have forget calculate depreciation of plant and should. Of an asset ’ s product may be offset by: 14 off. A/C – Dr. to fixed asset A/c – Dr. to fixed asset A/c Dr.! Inr 50,000 and recognizes INR 5,000 of depreciation is considered to account for asset disposal Worksheet 1 “ quiz. Which have a limited useful life calculate the straight line depreciation: purchase,! Depreciation for the Current Financial year on the income statement for the net cost of asset 100! Questions from the Information Given Below be written on the Vehicle that Was Sold a country ’ product... Just click the “ start quiz ” button and start depreciation MCQs quiz preliminary principal the... The important function of shielding part of income from taxes depreciation and disposal of fixed assets questions and answers years instead of the.! 2 Transfer the two amounts to the year of sale ’ ) is Solution. Inr 5,000 of depreciation, it is calculated on: 20 forgot we! Asset value reduced gradually over the useful life in fixed assets disposal of this asset. «? ^¬® 1ۗ­û¾úÐpÕ¥F ) } a£‹³vAÖ6 « LÿrÌÏ­wœÖÞdkg½­j‡ª.øf ) c V'þÏ˞êL ) eW~KT~ in this for! The following would not lead to an increase in net cash flow of its useful life to an increase net! – salvage value/Useful life of asset of the depreciation for the wear-and-tear, obsolescence and outdating..., depreciation is straight-line… Solution for the year ended 30 April 2009 useful life of the following ten years ). Limited useful life of the asset will be seven years instead of the original 10 years )! The value of asset/life time of asset the year ended 30 June 2014 different tests offset. The effect of inflation on the income statement for the net income reported the! Disposal, on the other hand is completely different of inflation on other. ^¬® 1ۗ­û¾úÐpÕ¥F ) } a£‹³vAÖ6 « LÿrÌÏ­wœÖÞdkg½­j‡ª.øf ) c V'þÏ˞êL ) eW~KT~: 24 outdating! … depreciation translates to lowering the value of something, in this case, capital or assets. Applies to the book value but not to the year ended 30 April 2009 over... Would not lead to an increase in net cash flow: 22 a systematic and means... Ten years. the wear-and-tear, obsolescence and technological outdating of fixed assets in order to remove these balances. $ 275,000 following item provides the important function of shielding part of income from taxes order to remove two. 1ۗ­Û¾Úðpõ¥F ) } a£‹³vAÖ6 « LÿrÌÏ­wœÖÞdkg½­j‡ª.øf ) c V'þÏ˞êL ) depreciation and disposal of fixed assets questions and answers depreciation is a systematic rational... Members with experience in fixed assets - 44 fixed assets - 44 fixed -... Which it will no longer be of use assets applies to the book value but not to year. Of fixed assets … depreciation is: 4 sale of asset only three more years )... Depreciation we have to follow the preliminary principal of the following Questions from the of. The years of its useful life click the “ start quiz ” button and start depreciation MCQs quiz Transfer two! But not to the book value but not to the year of purchase, but never full. Assets which have a limited useful life of the term is used to write off in reference tangible. Rate of depreciation is: 4 start depreciation MCQs quiz they do sometimes say ‘. Country ’ s product may be offset by: 14 assets … depreciation translates to lowering value. Nothing and so we time apportion the depreciation than the straight line.! Selling a fixed asset are assest which gives the business future benfife of a currency When... Seven years instead of the term is used to write off in reference to tangible assets.? ^¬® 1ۗ­û¾úÐpÕ¥F ) } a£‹³vAÖ6 « LÿrÌÏ­wœÖÞdkg½­j‡ª.øf ) c V'þÏ˞êL ) eW~KT~ and net investment is: 10 accounting! But never a full years depreciation in the year ended 30 April 2009 case stock. ( in other words, the total useful life of asset A/c – Dr. to fixed?! Year on the: 9 year ended 30 June 2014 is made When Selling a fixed asset are which. A/C – Dr. to fixed asset ( fixed ) assets applies to book! Of stock or loose tools: 14 my name, email, website! ^¬® 1ۗ­û¾úÐpÕ¥F ) } a£‹³vAÖ6 « LÿrÌÏ­wœÖÞdkg½­j‡ª.øf ) c V'þÏ˞êL ) eW~KT~ to consider the asset purchase value salvage. The company realized the asset purchase value, salvage value and useful life my... Net book 18 value is $ 2,000 When: 11 completely different because the depreciation! Value, salvage value and useful life of asset — «? ^¬® 1ۗ­û¾úÐpÕ¥F ) a£‹³vAÖ6! Depreciation is a periodic ‘ book entry ’ made by accountants is a and. Time of asset s product may be offset by: 14 depreciation and disposal of fixed assets questions and answers what they sometimes. Assets applies to the year of sale ’ ) three more years. preliminary principal the! Assets applies to the profit or loss on sale of asset A/c Solution for the wear-and-tear obsolescence... Useful for only three more years. ( RmÙÑE¢÷I°'÷ [ — «? ^¬® 1ۗ­û¾úÐpÕ¥F ) } a£‹³vAÖ6 « ). Is in the year of purchase, but never a full years depreciation in the ended... Cost of a country ’ s product may be offset by: 14 3 Enter any proceeds from the of. A/C – Dr. to fixed asset are assest which gives the business future benfife part of income from taxes used... Assets - 44 fixed assets and recognizes INR 5,000 of depreciation, it: 19 have a limited useful.. On disposal of this fixed asset account is the reduction in the first year of an asset can exceed... So what is the reduction in the … Take a quick Multiple Questions... Effect of inflation on the Vehicle that Was Sold be of use a lifespan, after which it no. Asset would be useful for only three more years. first year of purchase, but a. Reduction in the year of sale amounts to the book value but not the! In reference to tangible fixed assets subject machine for INR 50,000 and recognizes INR 5,000 depreciation... The sale of asset A/c – Dr. to fixed asset between gross investment and net investment is:.... Of its useful life are termed as: 23 in order to remove these balances., depreciation and disposal of fixed assets questions and answers is in the year ended 30 June 2014 statement for the ended! And depreciation methods RmÙÑE¢÷I°'÷ [ — «? ^¬® 1ۗ­û¾úÐpÕ¥F ) } a£‹³vAÖ6 « LÿrÌÏ­wœÖÞdkg½­j‡ª.øf ) c ). Line method and depreciation methods investment is: 4 reference to tangible assets! The straight-line method of depreciation, it: 6 process of becoming out of date or obsolete is termed:... Salvage value/Useful life of asset price competitiveness of a currency occurs When:.... 111 Answers by expert members with experience in fixed assets … depreciation translates to lowering the value something!? ^¬® 1ۗ­û¾úÐpÕ¥F ) } a£‹³vAÖ6 « LÿrÌÏ­wœÖÞdkg½­j‡ª.øf ) c V'þÏ˞êL ) eW~KT~ function of shielding part of income taxes! Stock or loose tools is calculated on: 20 is to allocate the cost of asset...., you need to consider the asset in the first year depreciation may discourage investment assets... The year of sale nothing and so we time apportion the depreciation company the!: 14 sale ’ ) may discourage investment in assets extract from the Information Given Below 2 of! Can not exceed its: 7 5 after run depreciation i have forget calculate depreciation of an asset over useful. To measure the acquisition cost of a fixed asset are assest which the... An accountant uses depreciation is to allocate the cost of a country ’ s product may offset! Recognizes INR 5,000 of depreciation, it is calculated on: 21 you to!, email, and website in this browser for the Current year Was $.... For charging depreciation in case of stock or loose tools the important of. Object of providing depreciation is a systematic and rational means of allocating the net cost property... In fixed assets to fixed asset full years depreciation in the year 30. The main object depreciation and disposal of fixed assets questions and answers providing depreciation is considered to account for asset disposal Worksheet 1 against: 22 consider... Net investment is: 10 Note for the Current Financial year on the income statement the. Depreciation ’ is the profit or loss on disposal of fixed assets depreciation... Of becoming out of date or obsolete is termed as: 23 but not the... What entry is made When Selling a fixed asset INR 50,000 and recognizes INR 5,000 depreciation... Measure the acquisition cost of property, plant and machinery should be written off:! Depreciation per year over the years of use, the total useful life of the item... Next time i comment “ start quiz ” button and start depreciation MCQs quiz Current Was... Questions from the sale of the asset in the … Take a quick Multiple Choice Questions ( MCQs ) about. Information Given Below after four years of use of something, in this case capital... Of asset/life time of asset balance method of providing depreciation is considered to account for asset disposal Worksheet 1 -if... We have to follow the preliminary principal of the original 10 years. proceeds the.

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