Written down Value Method(WDV)

Q.

Explain the meaning of gain and profit. Distinguish between these two terms.

Q.

The Diminishing balance method means a method by which-

1. The rate of depreciation falls year by year

2. The amount on which depreciation is calculated falls year by year

3. The rate and amount which is applied falls year by year

4. None of the above

Q.

Under diminishing balance method, depreciation is calculated on ___

1. Scrap Value

2. None of the above

3. Original Cost

4. Book Value

Q.

The vehicle costs Rs. 1, 50, 000; it charges 20% depreciation according to written down value method. Estimate the value of the vehicle after depreciation at the end of three years.

1. Rs. 68, 000

2. Rs. 56, 000

3. Rs. 78, 000

4. Rs. 76, 800

Q.

The cost of the asset is Rs. 60, 000 and depreciated at 12% p.a. using the written down method. At the end of three years, it will have a net book value of ______

1. Rs. 40, 888

2. Rs. 43, 888

3. Rs. 45, 332

4. Rs. 40, 000

Q.

What is another name for the fixed installment method?

Q. Under written down value method, depreciation is calculated on .

1. scrap value
2. original cost
3. book value
4. market value

Q.

In the books of D Ltd. the machinery account shows a debit balance of Rs.60, 000 as on April 1, 2017.The machinery was sold on March 31, 2018 for Rs.30, 000. The company charges depreciation @ 20% p.a. on diminishing balance method. Profit/Loss on sale of the machinery will be .................

1. Rs 18000 loss

2. Rs 18000 profit

3. Rs 13200 loss

4. Rs 13200 profit

Q.

Which of the following method of charging depreciation is accepted by the Income Tax Act?

1. Straight Line
2. Both Straight Line and Written Down Value
3. Written Down Value
4. None of these

Q. Plant & machinery has an opening balance of Rs. 20, 000.
Rate of depreciation =15% p.a.
Plant & machinery will be shown in the assets side of balance sheet at _____.

1. Rs. 16, 000
2. Rs. 20, 000
3. None of these
4. Rs. 17, 000

Q. Original cost = Rs.1, 26, 000. Salvage value = Rs.6, 000. Under WDV method, the value of depreciation for 2nd year will be taking 10% as rate.

1. Rs.10, 800
2. Rs.11, 340
3. Rs.15, 000
4. Rs.14, 000

Q.

Original cost= Rs 126000, Salvage value= Rs 6000, Dep for 2nd year under 10% WDV Method is ___

1. Rs 10, 800

2. Rs 11, 340

3. Rs 15, 000

4. Rs 14, 000

Q.

Amit Ltd. purchased a machine on 01.01.2013 for Rs. 1, 20, 000.
Installation expenses were Rs. 10, 000.
Residual value after 5 years is Rs. 5, 000.
Rate of depreciation is 10% on WDV basis.
Depreciation for 4th year = _________.

1. Rs. 12, 500

2. Rs. 11, 250

3. Rs. 10, 125

4. Rs. 9, 477

Q. Under written down value method, depreciation every year.

1. increases
2. decreases
3. remains constant

Q. In method, the value of the asset is not completely written off.

1. straight line
2. written down
3. amortisation
4. depletion

Q.

A boiler was purchased from abroad for Rs. 10000. Shipping and forward charges Rs. 2000 and expenses of installation amounts to Rs. 8000. Find the balance after three years @10% on diminishing balance method.

1. Rs 14580

2. Rs 12900

3. Rs 13800

4. Rs 11400

Q.

What is the journal entry for straight-line depreciation?

Q.

Which among the following is false about diminishing balance method-

1. The amount of depreciation is high in the initial years

2. Depreciation is always calculated on the original cost of the asset

3. The value of the asset cannot be reduced to exactly zero

4. Cost of depreciation varies every year

Q.

A machine acquired for Rs. 3, 60, 000 on 1st April 2006 and depreciated at 10% on WDV was sold for Rs. 3, 00, 000 on 31st March 2009. Depreciation is time apportioned. Expenses of disposal amounted to Rs. 3, 000.
What is the gain or loss on disposal of the machine to be reported in?

1. Rs. 1, 12, 000 gain

2. Rs. 34, 560 loss

3. Rs. 1, 47, 440 loss

4. Rs. 34, 560 gain

Q. Original cost= Rs.1, 37, 000, Salvage value= Rs.17, 000, Dep rate is 10% WDV Method. Asset sold for Rs.1, 00, 000 at the end of 3rd year. Gain/Loss is

1. Rs. 127 (gain)
2. Rs. 520 (loss)
3. Rs. 180 (gain)
4. Rs. 132 (loss)

Q.

A non-current asset cost Rs. 1, 20, 000 and is depreciated at 20% using the reducing balance method. After 3 years the net book value (WDV) is:

1. Rs. 48, 000

2. Rs. 61, 440

3. Rs. 49, 152

4. Rs. 56, 250

Q.

A vehicle acquired for Rs 60, 000 on 1st September 2005 and depreciated at 20% on WDV was sold for Rs. 4, 000 on 31st March 2011. Expenses of disposal was Rs. 200.
What is the gain or loss on disposal?

1. Rs. 600 gain

2. Rs. 11, 929 gain

3. Rs. 11, 929 loss

4. None

Q.

A non-current asset cost Rs. 32, 700 and has an estimated residual value of Rs. 2, 700 after 4 years. Using the WDV method @ 10%, the written down value (WDV) after 3 years is:

1. Rs. 16, 250

2. Rs. 23, 838

3. Rs. 21, 870

4. Rs. 14, 590

Q. N Ltd. purchased a machinery on April 1, 2010 for Rs 6, 00, 000. It is estimated that the machinery will have a useful life of 5 years after which it will have no salvage value. If the company follows sum of year digit method of depredation, the amount of depreciation charged during the year 2014-2015 was ____________.

1. Rs 40, 000
2. Rs 1, 20, 000
3. Rs 1, 90, 000
4. Rs 2, 00, 000

Q.

Original cost= Rs 137000, Salvage value= Rs 17000, Dep rate is 10% WDV Method. Asset sold for Rs 100000 at the end of 3rd year. Gain/Loss is…………………

1. Rs 12520 profit

2. Rs 11520 loss

3. Rs 18000 profit

4. Rs 13200 loss

Q.

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Q.

What Are The Factors Affecting The Dividend Decision?

Q. Date of purchase 1st July, Purchase Price of Machine Rs. 80, 000, Installation Charges Rs. 20, 000. Residual Value Rs. 40, 960. Useful life 4 years, Accounting year - financial year. The depreciation under WDV Method for the first year will be:

1. Rs. 20, 000
2. Rs. 15, 000
3. None of these
4. Rs. 10, 000

Q. Any addition or extension to asset must be ________ its useful life of that asset.

1. Separated
2. Ignored
3. Appreciated
4. Depreciated

Q. Given that the value of furniture on 1.1.93 is Rs. 8, 000, furniture purchased during the year is Rs. 4, 000, sale of furniture no loss no profit basis is Rs. 2, 000, and the furniture is valued at Rs. 7, 000 on 31.12.93, the depreciation for the year 1993 will be:

1. Rs. 1, 000
2. Rs. 5, 000
3. Rs. 3, 000
4. Rs. 7, 000