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Do you agree or disagree with the following statement: By charging depreciation on fixed assets ascertainment of true and fair financial position is possible.

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Question

Do you agree or disagree with the following statement:

By charging depreciation on fixed assets ascertainment of true and fair financial position is possible.

Options

  • Agree

  • Disagree

MCQ
True or False
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Solution

By charging depreciation on fixed assets ascertainment of true and fair financial position is possible. - Agree

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Chapter 7: Depreciation - Exercises [Page 243]

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The type of asset on which depreciation is charged.


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Method of depreciation that cannot reach to zero value.


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Under ______ system, the amount of depreciation changes every year.


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______ is the value which an asset realises at the end of its useful life.


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Depreciation Account is a ______ account.


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State the advantages of straight-line method of depreciation.


An asset is purchased on 1.1.2016 for ₹ 50,000. Depreciation is to be provided annually according to the straight-line method. The useful life of the asset is 10 years and its residual value is ₹ 10,000. Accounts are closed on 31st December every year. You are required to find out the rate of depreciation and give journal entries for first two years.


From the following particulars, give journal entries for 2 years and prepare machinery account under straight-line method of providing depreciation:

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Price of the machine ₹ 36,000

Freight charges ₹ 2,500

Installation charges ₹ 1,500

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An asset is purchased for ₹ 50,000. The rate of depreciation is 15% p.a. Calculate the annual depreciation for the first two years under the diminishing balance method.


Furniture costing ₹ 5,000 was purchased on 1.1.2016, the installation charges being ₹ 1,000. The furniture is to be depreciated @ 10% p.a. on the diminishing balance method. Pass journal entries for the first two years.


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M/s Sitaram and Co Purchased a Machinery on 1st January 2016 for ₹ 2,00,000. The company provides depreciation @ 10% p.a. on Reducing Balance Method on 31st March every year. Calculate Written Down Value of Machinery as of 31st March 2017.


Shubhangi Trading Company of Dombivli purchased Machinery for ₹ 86,000 on 1st January 2016 and immediately spent ₹ 4,000 on its fixation and erection. On 1st October 2016 additional Machinery costing ₹ 40,000 was purchased.

On 1st October 2017, the Machinery purchased on 1st January 2016 became obsolete and was sold for ₹ 70,000. On 1st July 2017, a new Machine was also purchased for ₹ 45,000.

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