Related InterviewSolutions

• State the advantages and limitations of written down value method of depreciation.
• State the advantages and limitations of straight line method of depreciation.
• What are the causes for depreciation?
• Calculate the rate of depreciation under straight line method from the following information:Purchased a second hand machinery on 1.1.2018 for Rs. 38,000 On 1.1.2018 spent Rs. 12,000 on its repairs Expected useful life of machine is 4 years Estimated residual value Rs. 6,000
• Depreciation is to be calculated from the date when ……(a) Asset is put to use (b) Purchase order is made (c) Asset is received at business premises (d) Invoice of assets is received
• Calculate the rate of depreciation under straight line method. Purchase price of a machine Rs. 80,000 Expenses to be capitalised Rs. 20,000 Estimated residual value Rs. 4,000 Expected useful life Rs. 4 years
• A depreciable asset may suffer obsolescence due to ...(a) Passage of time(b) were and tear (c) Technological changes(d) None of the above
• Depreciation is the gradual and permanent decrease in the value of an asset from any cause ……(a) Owen (b) Wheeler (c) Spicer and Pegler (d) R.N. Carter
• Lucky & Co’s income statement shows a loss of Rs. 3,000. The owner thinks that there is no need to provide for depreciation as the company has made a loss. He also suggests his accountant to change the method of depreciation for the next year so as to avoid the loss. But, the accountant is hesitant to make the necessary changes suggested by his owner. Now, discuss on the following points:(i) Do you agree on the point that there is no need to charge depreciation when the company has made a loss?(ii) Why does the accountant hesitate to make the changes suggested by his owner?(iii) What are the accounting principles not followed if the accountant agrees to his owner’s suggestion?(iv) Do you think charging depreciation could be the only reason for the company’s loss?
• What is wear and tear?