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 . If the rate of depreciation is same, then the amount of depreciation under straight line method vis-à-vis written down value method will be (a) Equal in all years (b) Equal in the first year but higher in subsequent years (c) Equal in the first year but lower in subsequent years (d) Lower in the first year but equal in subsequent years. Answer (c) (b) (b) (d) (b) (c) (b) (b) (a) (b) II Very short answer questions . What is meant by depreciation?
. List out the various methods of depreciation. . Give the formula to find out the amount and rate of depreciation under straight line method of depreciation.
. What is annuity method? . What is sinking fund method?
III Short answer questions . What are the objectives of providing depreciation? . What are the causes for depreciation?
. State the advantages and limitations of straight line method of depreciation. . State the advantages and limitations of written down value method of depreciation.
. Distinguish between straight line method and written down value method of providing depreciation. IV Exercises Straight line method . A firm purchased a plant for ` , .
Erection charges amounted to ` , . Effective life of the plant is years. Calculate the amount of depreciation per year under straight line method. ( Answer : ` , ) .
A company purchased a building for ` , . The useful life of the building is years and the residual value is ` , . Find out the amount and rate of depreciation under straight line method. ( Answer : Amount of depreciation: ` , ; Rate of depreciation %) Accountancy .
Furniture was purchased for ` , , on . . . It is expected to last for years.
Estimated scrap at the end of five years is ` , .