📘 DEPRECIATION METHODS – 100 MCQs

 

📘 DEPRECIATION METHODS – 100 MCQs

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1–10 (Conceptual Depth)

Q1. Under which method does depreciation expense remain constant each year?
A) Written Down Value
B) Sum of Years Digits
C) Straight Line Method
D) Annuity Method
Answer: C

Q2. Which method assumes asset utility declines over time?
A) SLM
B) WDV
C) Depletion
D) Annuity
Answer: B

Q3. Residual value is ignored in which method?
A) SLM
B) WDV
C) Units of Production
D) Sum of Years Digits
Answer: B

Q4. Which method charges interest on capital invested?
A) WDV
B) Annuity
C) SLM
D) Depletion
Answer: B

Q5. Depreciation is highest in initial years under:
A) SLM
B) WDV
C) Annuity
D) Insurance Policy
Answer: B

Q6. Which method is based on usage rather than time?
A) SLM
B) WDV
C) Units of Production
D) Annuity
Answer: C

Q7. Scrap value is most significant in:
A) WDV
B) SLM
C) Depletion
D) Insurance
Answer: B

Q8. Which method results in decreasing depreciation charge?
A) SLM
B) WDV
C) Annuity
D) Depletion
Answer: B

Q9. Which method equalizes total cost including interest?
A) WDV
B) SLM
C) Annuity
D) Depletion
Answer: C

Q10. Which method is suitable for mines?
A) SLM
B) WDV
C) Depletion
D) Annuity
Answer: C

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11–30 (Numerical Based)

Q11. Cost ₹1,00,000, scrap ₹10,000, life 5 years → SLM depreciation?
A) 18,000
B) 20,000
C) 22,000
D) 16,000
Answer: A

Q12. Same data, rate of SLM?
A) 18%
B) 20%
C) 22%
D) 16%
Answer: A

Q13. Cost ₹50,000, rate 20% WDV → depreciation year 2?
A) 10,000
B) 8,000
C) 6,400
D) 5,000
Answer: B

Q14. Book value after 2 years (Q13)?
A) 32,000
B) 30,000
C) 28,000
D) 40,000
Answer: A

Q15. If WDV rate = 10%, after 3 years value = ? (Cost ₹10,000)
A) 7,290
B) 7,000
C) 6,561
D) 8,000
Answer: A

Q16. Under SLM, depreciation remains:
A) Variable
B) Increasing
C) Constant
D) Decreasing
Answer: C

Q17. SYD for 5 years = ?
A) 10
B) 15
C) 20
D) 25
Answer: B

Q18. Depreciation fraction in year 1 (SYD, 5 yrs)?
A) 5/15
B) 4/15
C) 3/15
D) 2/15
Answer: A

Q19. Depreciation year 2 fraction?
A) 4/15
B) 5/15
C) 3/15
D) 2/15
Answer: A

Q20. Units produced method depends on:
A) Time
B) Usage
C) Cost
D) Scrap
Answer: B

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21–40 (Advanced Concepts)

Q21. Which method violates matching principle less?
A) SLM
B) Units of Production
C) WDV
D) Annuity
Answer: B

Q22. Which method is NOT systematic allocation?
A) SLM
B) WDV
C) Depletion
D) Market Value
Answer: D

Q23. Depreciation under WDV never becomes:
A) Zero
B) Negative
C) Constant
D) Increasing
Answer: A

Q24. WDV method is also called:
A) Fixed method
B) Reducing balance
C) Straight
D) Equal method
Answer: B

Q25. Which method considers time value of money?
A) SLM
B) WDV
C) Annuity
D) Depletion
Answer: C

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41–60 (Tricky & Application)

Q41. Change from SLM to WDV is treated as:
A) Error
B) Policy change
C) Estimate change
D) Fraud
Answer: C

Q42. Depreciation begins when:
A) Purchased
B) Installed
C) Ready for use
D) Paid
Answer: C

Q43. If asset used half year (SLM), depreciation is:
A) Full
B) Half
C) Double
D) None
Answer: B

Q44. WDV formula:
A) Cost × Rate
B) Cost – Depreciation
C) Opening WDV × Rate
D) Closing value × Rate
Answer: C

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61–80 (High Difficulty Numerical Logic)

Q61. Cost ₹1,00,000, WDV 10%, value after 2 yrs?
A) 81,000
B) 80,000
C) 82,000
D) 79,000
Answer: A

Q62. Depreciation year 3 (Q61)?
A) 8,100
B) 9,000
C) 7,000
D) 10,000
Answer: A

Q63. If asset life doubles, SLM depreciation:
A) Doubles
B) Halves
C) Same
D) Zero
Answer: B

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81–100 (Expert Level)

Q81. Which method leads to higher early profits?
A) WDV
B) SLM
C) SYD
D) Annuity
Answer: B

Q82. Depreciation affects:
A) Cash flow
B) Profit only
C) Both
D) None
Answer: B

Q83. Which method gives true cost allocation with usage?
A) SLM
B) Units method
C) WDV
D) SYD
Answer: B

Q84. WDV is best for:
A) Buildings
B) Machinery
C) Land
D) Furniture
Answer: B

Q85. Land depreciation is:
A) Allowed
B) Not allowed
C) Optional
D) Mandatory
Answer: B