Depreciation and Amortisation MCQ

1. Increase in market value of a fixed asset is one of the reasons for depreciation being charged.

2. Depreciation is a cash expenditure like other normal expenses.

3. Cost of property, plant and equipment includes purchase price, refundable taxes & import duties after deducting any discount or rebate.

4. Cost of fixed asset should also include cost of opening a new facility such as inauguration costs.

5. Depreciation is charged with a constant amount under straight line method and charged with a constant percentage under diminishing balance method.

6. In case an item of Property, Plant & Equipment is revalued, whole class of assets to which that asset being revalued belongs should be revalued.

7. In case the carrying amount of an asset is decreased due to revaluation, such decrease should always be recognized in the Profit and Loss account.

8. Akash purchased a machine for Rs. 12,00,000. Estimated useful life is 10 years and scrap value is Rs. 1,00,000. Depreciation for the first year using sum of the years digit method shall be Rs. 2,00,000.