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Standard XII

Accountancy

Introduction to Indirect Method

The valuing o...

Question

The valuing of assets at _________ principle for balance sheet is followed while preparing financial statements.

Cost less depreciation

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Cost plus depreciation

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Depreciation minus accumulated depreciation

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Accumulated depreciation plus depreciation

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Solution

The correct option is A Cost less depreciation
Asset valuation is the process of assessing the value of a company, real property or any other item of worth, in particular assets that produce cash flows. While preparing financial statement The fixed asset is depreciated until the book value equals scrap value. Book value at the end of year becomes book value of next year.

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Similar questions

Q. State whether the following Statements are True or False

1. There is need to provide depreciation if it is maintained with care.
2. Depreciation cannot be provided in case of loss in a financial year.
3. A Specific reserve can be created for any purpose.
4. Capital Reserves are not freely distributed as profits.
5. Under the written down value method depreciation is calculated on the original cost of an asset.
6. Depreciation is the process of valuation of asset.
7. Depreciation is a non-cash expense.
8. Secret reserves are disclosed in Balance Sheet.
9. General reserves is created to meet contingency liability.
10. Depreciation is charged only on fixed asset.

Q. On the basis of following information answer the following question.

The balance in accumulated depreciation account of a company at the beginning of year

2008 - 2009

was Rs

2, 00, 000

when the original cost of the assets amounted to Rs

10, 00, 000

. The company charges

10 %

depreciation on a SLM basis for all assets including those which have been either purchased or sold during the year. One such asset costing Rs.

5, 00, 000

which accumulated depreciation as at the beginning of the year of Rs

80, 000

was disposed off during the year.

The balance of the accumulated depreciation account at the end of the year considering the current year's depreciation charge would be ______________.

While preparing a bank reconciliation statement from the passbook overdraft balance, indicate whether the following item will be written in plus or minus column.

(i) Interest allowed by bank.

(ii) Insurance premium paid by bank.

Q. Assets in the balance sheet are shown at cost less depreciation rather than their replacement cost because of which accounting convention?

Q. On the basis of following information answer the following question.

The balance in accumulated depreciation account of a company at the beginning of year

2008 - 2009

was Rs

2, 00, 000

when the original cost of the assets amounted to Rs

10, 00, 000

. The company charges

10 %

depreciation on a SLM basis for all assets including those which have been either purchased or sold during the year. One such asset costing Rs.

5, 00, 000

which accumulated depreciation as at the beginning of the year of Rs

80, 000

was disposed off during the year.

Depreciation from the current year = ?

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