English

State whether the following statement is True or False with reasons: Depreciation need not be charged when business is making losses.

Advertisements
Advertisements

Question

State whether the following statement is True or False with reasons:

Depreciation need not be charged when business is making losses.

Options

  • True

  • False

MCQ
True or False
Advertisements

Solution

This statement is False.
Depreciation is an element of cost which is to be calculated/charged irrespective of profit or loss of the business. Also, to find actual profit or loss of the business, it is compulsory to calculate depreciation.
shaalaa.com
  Is there an error in this question or solution?
Chapter 7: Depreciation - Exercises [Page 243]

APPEARS IN

RELATED QUESTIONS

Write the word/term/phrase which can substitute the following statement:

Expenses incurred for fixation of the new asset to bring it in working condition.


Write the word/term/phrase which can substitute the following statement:

Method of depreciation that cannot reach to zero value.


Select the most appropriate answer from the alternatives given below and rewrite the sentence:

The amount that a fixed asset is expected to realise on its disposal is known as ______


Select the most appropriate answer from the alternatives given below and rewrite the sentence:

The amount of depreciation reduces year after year under ______


Complete the following sentence:

Depreciation = `"Cost of asset - _____________"/"Estimated Working Life of the Asset"`


Complete the following sentence:

In Fixed Instalment System the amount of depreciation is ______ every year.


Under the written-down value method of depreciation, the amount of depreciation is ______.


A depreciable asset may suffer obsolescence due to ______.


Which method shall be efficient, if repairs and maintenance cost of an asset increases as it grows older.


What is the annuity method?


State the limitations of written down value method of depreciation.


Distinguish between straight-line method and written down value method of providing depreciation.


Calculate the rate of depreciation under straight-line method from the following information:

Purchased second-hand machinery on 1.1.2018 for ₹ 38,000
On 1.1.2018 spent ₹ 12,000 on its repairs
Expected useful life of the machine is 4 years
Estimated residual value ₹ 6,000.


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

Machinery was purchased on 1.1.2016

Price of the machine ₹ 36,000

Freight charges ₹ 2,500

Installation charges ₹ 1,500

Life of the machine 5 years


Ragul purchased machinery on April 1, 2014 for ₹ 2,00,000. On 1st October 2015, a new machine costing ₹ 1,20,000 was purchased. On 30th September 2016, the machinery purchased on April 1, 2014 was sold for ₹ 1,20,000. Books of accounts are closed on 31st March and depreciation is to be provided at 10% p.a. on straight line method. Prepare machinery account and depreciation account for the years 2014-15 to 2016-17.


A firm acquired a machine on 1st April 2015 at a cost of ₹ 50,000. Its life is 6 years. The firm writes off depreciation @ 30% p.a. on the diminishing balance method. The firm closes its books on 31st December every year. Show the machinery account and depreciation account for three years starting from 1st April 2015.


If the cost of the Computer is ₹ 40,000 and depreciation is to be charged at 8% p.a. Calculate the amount of depreciation.


M/s Omkar Enterprise Jalgaon acquired a Printing Machine for ₹ 75,000 on 1st Oct 2015 and spent ₹ 5,000 on its transport and installation. Another Machine for ₹ 45,000 was purchased on 1st Jan 2017. Depreciation is charged at the rate of 20% on Written Down Value Method, on 31st March every year.
Prepare Printing Machine Account for the first four years.


Mahesh Traders Solapur purchased Furniture on 1st April 2014 for ₹ 20,000. In the same year on 1st, Oct. additional Furniture was purchased for ₹ 10,000.
On 1st Oct. 2015, the Furniture purchased on 1st April 2014 was sold for ₹ 15,000 and on the same day, a new Furniture was purchased for ₹ 20,000.
The firm charged depreciation at 10% p.a. on the Reducing Balance Method.
Prepare Furniture Account and Depreciation Account for the year ending 31st March 2015, 2016, and 2017.


On 1st April 2015, Suman Traders purchased Machinery for ₹ 30,000. On 1st Oct. 2015, they purchased further Machinery costing ₹ 20,000.
On 1st Oct. 2016, they sold the Machine purchased on 1st April 2015 for ₹ 18,000 and brought another Machine for ₹ 15,000 on the same date.
Depreciation is provided on Machinery @ 20% p.a. on the Diminishing Balance Method and the financial year closes on 31st March every year.
Prepare the Machinery Account and Depreciation Account for the year 2015-16, 2016-17, and 2017-18.


M/s Omkar Enterprise Jalgaon acquired a Printing Machine for ₹ 75,000 on 1 Oct 2015 and spent ₹ 5,000 on its transport and installation. Another Machine for ₹ 45,000 was purchased on 1st Jan 2017. Depreciation is charged at the rate of 20% on the Written Down Value Method, on 31st March every year.

Prepare Printing Machine Account for the first four years.


M/s Omkar Enterprise Jalgaon acquired a Printing Machine for ₹ 75,000 on 1 Oct 2015 and spent ₹ 5,000 on its transport and installation. Another Machine for ₹ 45,000 was purchased on 1st Jan 2017. Depreciation is charged at the rate of 20% on Written Down Value Method, on 31st march every year.

Prepare Printing Machine Account for the first four years.


On 1st April 2015, Farid of Nasik purchased a Motor Car for ₹ 55,000. The scrap value of the Motor Car was estimated at ₹ 10,000 and its estimated life is 10 years. The Registration charge for the Motor Car was ₹ 5,000.

Show Motor Car Account for first four years, assuming that the books of accounts are closed on 31st March every year.


Which of the following methods charges an equal amount of depreciation every year?


Share
Notifications

Englishहिंदीमराठी


      Forgot password?
Use app×