Straight Line Method(SLM)
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Prepare Trail Balance from the following information:
Bank overdraft Rs.28, 000, Cash in hand Rs.4, 000, Purchase return Rs.8, 000, Sundry expenses Rs.24, 000, Sales return Rs.16, 000, Salaries Rs.16, 000, Purchases Rs.56, 000, Sales Rs.88, 000, Creditors Rs.24, 000, Debtors Rs.16, 000, Stock (opening) Rs.20, 000, Machinery Rs.40, 000, Capital Rs.44, 000.
Original cost of machine is Rs. 4, 00, 000 with a scrap value of Rs. 25, 000 after 4 years. Calculate rate of Depreciation.
- increases
- decreases
- remains constant
Under which depreciation method the amount of depreciation expense remains same throughout the useful life of a fixed asset?
Straight line method
Reducing balance method
Number of units produced method
Machine hours method
Depreciation is always charged on ___________assets
Current
Fixed
Fictitious
Intangible
- Diminishing Balance
- Written Down Value
- None of these
- Straight Line
Mr. Muneesh maintains his books of accounts from incomplete records.
His books provides the information
ItemsJan 1, 2005Dec 31, 2005Cash 1, 200 1, 600Bills Receivable –– 2, 400Debtors16, 80027, 200Stock22, 40024, 400Investment –– 8, 000Furniture 7, 500 8, 000Creditors14, 00015, 200
He withdrew Rs. 300 per month for personal expenses. He sold his investment of Rs.16, 000 at 2% premium and introduced that amount into business.
The following balances appear in the books of Crystal Ltd on January 1, 2005
Items(Rs)Machinery account on15, 00, 000Provision for depreciation account 5, 50, 000
On April 1, 2005, a machinery which was purchased on January 1, 2002 for Rs 2, 00, 000 was sold for Rs 75, 000. A new machine was purchased on July 1, 2005 for Rs 6, 00, 000. Depreciation is provided on machinery at 20% per annum on straight line method and books are closed on December 31st every year. Prepare the Machinery account and Provision for depreciation account for the year ending December 31, 2005.
Annual depreciation of machine is Rs. 40, 000, cost of machine is Rs. 5, 00, 000, rate of depreciation according to straight-line method will be-
9%
18%
16%
8%
Mr. Arnav does not keep proper records of his business. He provided following information.You are required to prepare a statement showing the profit or loss for the year.
Items(Rs.) Capital at the beginning of the year15, 00, 000Bills receivable 60, 000Cash in hand 80, 000Furniture 9, 00, 000Building10, 00, 000Creditors 6, 00, 000Stock in trade 2, 00, 000Further capital introduced 3, 20, 000Drawings made during the period 80, 000
Ascertainment of statement of affairs at the end of the year and calculation of profit and loss.
Cost of the asset is Rs 5, 00, 000. Residual Value is Rs. 1, 00, 000. If the useful life of asset is 10 years, What will be the amount of depreciation under SLM?
Rs. 40, 000
Rs. 50, 000
Rs. 10, 000
Rs. 60, 000
A company purchased a vehicle for Rs 6000. It will be used for 5 years and its residual value is expected to be Rs 1000. What is the annual amount of deprecation using straight line method of depreciation?
Rs 1000
Rs 2000
Rs 3000
Rs 3300
Evergreen Traders purchased a machine on 1st April, 2012 at a cost of Rs. 8, 000 and spent Rs. 2, 000 on its installation. The firm writes off depreciation @ 10 % per annum by fixed instalment method.
Show the machine account for 4 years in the books of Evergreen Traders. The books are closed on 31st March every year.
Carriage Transport Company purchased 5 trucks at the cost of Rs 2, 00, 000 each on April 1, 2001. The company writes off depreciation @ 20% per annum on original cost and closes its books on December 31st, every year. On October 1, 2003, one of the trucks is involved in an accident and is completely destroyed. The insurance company has agreed to pay Rs 70, 000 in full settlement of the claim. On the same date, the company purchased a second-hand truck for Rs 1, 00, 000 and spent Rs 20, 000 on its overhauling. Prepare Truck account and Provision for depreciation account for the three years ended on December 31, 2003. Also, give Truck account if truck disposal account is prepared.
If the estimated useful life of an asset is 10 years, the straight line depreciation rate would be:
1%
0.01%
0.1 %
10%
Rs Ltd purchased a vechile for Rs. 4, 00, 000. After 4 years its salvage value is estimated at Rs. 40, 000. Find out the amount of depreciation to be charged every year based on straight line basis, and also show the vehicle account as would appear for four years assuming it is sold for Rs. 50, 000 at the end of the fourth year when depreciation is charged to asset account. Prepare the ledger in the books of account of RS. Ltd.
- Rs.65, 000
- Rs.89, 000
- Rs.77, 500
- Rs.78, 000
If book value of a fixed asset equals to market value or sale proceeds of a fixed asset then :
there will be gain on sale
None of the above
no loss, no gain
there will be loss on sale
Sudarshan Ltd. purchased a machinery of Rs.1, 00, 000 and spent Rs. 10, 000 on its installation. The estimated useful life of the asset is 10 years. Calculate depreciation for the year ending 31st March, 2016 in each of the following instances.
(i) Depreciation is to be charged @ 10 % per annum and the machinery was purchased on 1st April, 2015.
(ii) Depreciation is to be charged @ 10 % per annum and the machinery was purchased on 1st October, 2015.
(iii) Depreciation is to be charged @ 10 % and the machinery was purchased on 1st January, 2016.
- straight line
- written down value
- amortisation
- depletion
(Cost of the asset minus scrap value)/ Life of the asset is the formula of
Diminishing balance method
Annuity method
Straight line method
Sum of the digits method
Madhukar Ltd. purchased a truck for Rs.7, 50, 000 on 1st July, 2014. Depreciation is charged on truck @ 15 % per annum on straight line method. On 1st October, 2016, the truck met with an accident. It was sold for Rs.2, 00, 000. Prepare truck account for three years assuming that the company closes its books on 31st December every year.
If value of an asset is Rs 9, 00, 000, scrap value is Rs 1, 25, 000, estimated life is 10 years, then the cost of depreciation under straight-line method will be-
Rs 65, 000
Rs 89, 000
Rs 77, 500
Rs 78000
- straight line
- written down value
- amortisation
- depletion
Cost of the fixed asset – Salvage value =
Market value
Depreciable cost
Book value
None of these
- gain on sale
- loss on sale
- no loss, no gain
ABC Company provides the following information:
Cost of the equipment: Rs. 5, 000
Salvage value: Rs. 500
Useful life of equipment: 10 years
Under straight line method, the yearly depreciation charge is:
Rs. 450
Rs. 500
Rs. 550
Rs. 50
As per SLM method rate of depreciation p.a. = ____________.
- 10.55%
- 9.50%
- 10%
- 9.80%
Under straight line method with salvage, depreciation is calculated on?
Market value of asset
Cost of a fixed asset
Cost of repairs of a fixed asset
Cost of fixed asset - Salvage value