Fixed assets and Depreciation MCQs


In depreciation calculation, the useful life of a fixed asset is:

A)  a certain figureWRONG ANSWER

B)  an estimateRIGHT ANSWER!!!

C)  a predetermined figure for all fixed assetsWRONG ANSWER


Depreciable amount + Residual value of a fixed asset =?

A)  Depreciation expensesWRONG ANSWER

B)  Accumulated depreciation WRONG ANSWER

C)  Cost of the fixed asset RIGHT ANSWER!!!

D)  Future economic benefits of a fixed assetWRONG ANSWER


Cost of a fixed asset – Accumulated depreciation expenses of the fixed asset=?

A)  Book value of a fixed assetRIGHT ANSWER!!!

B)  Market value of a fixed asset WRONG ANSWER

C)  Historical cost of a fixed asset WRONG ANSWER

D)  Recoverable amount of a fixed asset WRONG ANSWER


The estimate about useful life of a fixed asset:

A)  Can never be changed WRONG ANSWER

B)  Can be changedRIGHT ANSWER!!!


Which of the following is the correct formula for calculating depreciation using service hours method?

A)  Depreciation=(Cost - Scrape value) / Total hours X Actual hoursRIGHT ANSWER!!!

B)  Depreciation=(Cost - Accumulated depreciation) / Total hours X Actual hours WRONG ANSWER

C)  Depreciation=(Cost - Accumulated depreciation) / Total hours X Total hours WRONG ANSWER

D)  Depreciation=(Cost - Scrape value) / Actual hours X Total hoursWRONG ANSWER


The purchase price of a software that will be used for more than 12 months should be regarded as:

A)  a revenue expenditure WRONG ANSWER

B)  a capital expenditureRIGHT ANSWER!!!

C)  a long term expenseWRONG ANSWER

D)  an accounting period expenseWRONG ANSWER


XYZ firm has imported a machine from abroad. Which of the following is NOT the element of machine’s cost?

A)  Purchase price of machine WRONG ANSWER

B)  Import duty WRONG ANSWER

C)  Demurrage charges WRONG ANSWER

D)  Refundable tax RIGHT ANSWER!!!


A company purchased a new machine for $500,000 and machine’s test run was started to make sure that machine works properly. There was expense of $5000 incurred on test run, however the sale proceeds of test production were $2000. You are required to find out the total cost of machine?

A)  $500,000WRONG ANSWER

B)  $505,000WRONG ANSWER

C)  503,000 RIGHT ANSWER!!!



Which of the following fixed assets is not depreciated in the ordinary circumstances?

A)  Plant and machineryWRONG ANSWER



D)  EquipmentsWRONG ANSWER


In the calculation of depreciation, all of the following items are actually estimates except:

A)  Useful life WRONG ANSWER

B)  Residual valueWRONG ANSWER

C)  Historical cost RIGHT ANSWER!!!

D)  Salvage value WRONG ANSWER