Question

1. if the straight-line method of depreciation rather than the reducing balance method is selected, in the later years of the assets useful life the depreciation charge will be:
a. greater
b. smaller
c. the same
d. cannot say

2. if the straight-line method of depreciation rather than the reducing balance method is selected, in the early years of the assets useful life the depreciation charge will be:
a. greater
b. smaller
c. the same
d. cannot say

3. which statement best describes the nature of depreciation
a. writing the the value of an asset according to its decline in its physical efficiency
b. allocating the cost of an asset over it's useful life

4. to reflect the tax-effect on the gain on revaluation, the required journal entry is?

5. in accounting standard ias 16/aasb 116 a downward revaluation is now known as a:
a. revalution depletion
b. revalution increment
c. revalution decrease
d. revalution decrement

Answer 1

Depreciation is the reduction in the value of an asset over time, due in particular to wear and tear

Under straight line method of depreciation ,the asset is depreciated equally over its estimated useful life

1) option (c) is the right answer

Depreciation charge for the later years will be the same

2)option (c) is the right answer

Depreciation charge for the early years of the asset will be same

3)option (a ) is the right answer

writing the the value of an asset according to its decline in its physical efficiency

4) Journal entry

By gain on revaluation a/c. Dr

To income tax expense. A/c. Cr

To Asset revaluation surplus. A/c. Cr

5)option(d)is the right answer

Revaluation decrement