SSC CGL Finance – Capital & Revenue; Depreciation Accounting – Exam-Level Drill

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SSC CGL Finance – Capital & Revenue; Depreciation Accounting – Exam-Level Drill – 10 questions, subject: Finance & Economics (Tier II Paper III). Every question has the correct answer with a one-line explanation; tap "Show Answer". Free practice for TNPSC, UPSC, SSC, Bank and RRB exams – Shanmugam IAS Academy, Coimbatore.

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1.  
Arasu Mills (year ends 31 March; depreciation 10% p.a. on cost, SLM, for months in use): Machine X bought 1 April 2021 for ₹ 3,00,000; Machine Y bought 1 October 2023 for ₹ 1,60,000; Machine Z bought 1 July 2024 for ₹ 1,20,000; Machine X sold on 31 December 2024 for ₹ 2,00,000. Total depreciation for 2024-25 is:

Correct Answer: A [₹ 47,500]

Explanation:

X 9 months 22,500 + Y 16,000 + Z 9 months 9,000 = 47,500.

2.  
Arasu Mills (year ends 31 March; depreciation 10% p.a. on cost, SLM, for months in use): Machine X bought 1 April 2021 for ₹ 3,00,000; Machine Y bought 1 October 2023 for ₹ 1,60,000; Machine Z bought 1 July 2024 for ₹ 1,20,000; Machine X sold on 31 December 2024 for ₹ 2,00,000. Profit or loss on the sale of Machine X is:

Correct Answer: D [Profit ₹ 12,500]

Explanation:

Accumulated 1,12,500; BV 1,87,500; 2,00,000 − 1,87,500 = +12,500.

3.  
Arasu Mills (year ends 31 March; depreciation 10% p.a. on cost, SLM, for months in use): Machine X bought 1 April 2021 for ₹ 3,00,000; Machine Y bought 1 October 2023 for ₹ 1,60,000; Machine Z bought 1 July 2024 for ₹ 1,20,000; Machine X sold on 31 December 2024 for ₹ 2,00,000. The balance of the Machinery Account (asset-account method) on 31 March 2025 is:

Correct Answer: C [₹ 2,47,000]

Explanation:

Y 1,36,000 + Z 1,11,000 = 2,47,000.

4.  
Arasu Mills (year ends 31 March; depreciation 10% p.a. on cost, SLM, for months in use): Machine X bought 1 April 2021 for ₹ 3,00,000; Machine Y bought 1 October 2023 for ₹ 1,60,000; Machine Z bought 1 July 2024 for ₹ 1,20,000; Machine X sold on 31 December 2024 for ₹ 2,00,000. Depreciation for 2023-24 is:

Correct Answer: A [₹ 38,000]

Explanation:

X 30,000 + Y 6 months 8,000 = 38,000.

5.  
Arasu Mills (year ends 31 March; depreciation 10% p.a. on cost, SLM, for months in use): Machine X bought 1 April 2021 for ₹ 3,00,000; Machine Y bought 1 October 2023 for ₹ 1,60,000; Machine Z bought 1 July 2024 for ₹ 1,20,000; Machine X sold on 31 December 2024 for ₹ 2,00,000. Under the provision method, the Provision for Depreciation on 31 March 2025 is:

Correct Answer: B [₹ 33,000]

Explanation:

Only Y (8,000 + 16,000) and Z (9,000) remain: 33,000.

6.  
Arasu Mills (year ends 31 March; depreciation 10% p.a. on cost, SLM, for months in use): Machine X bought 1 April 2021 for ₹ 3,00,000; Machine Y bought 1 October 2023 for ₹ 1,60,000; Machine Z bought 1 July 2024 for ₹ 1,20,000; Machine X sold on 31 December 2024 for ₹ 2,00,000. Under the provision method, the amount transferred from Provision for Depreciation to the Machinery Disposal Account is:

Correct Answer: D [₹ 1,12,500]

Explanation:

30,000 × 3 + 22,500 = 1,12,500.

7.  
A machine is bought for ₹ 4,00,000 and ₹ 50,000 is spent on its installation. It is depreciated at 20% WDV. Its book value at the end of 3 years is:

Correct Answer: C [₹ 2,30,400]

Explanation:

Answer: ₹ 2,30,400. 4,50,000 × 0.512 = 2,30,400.

8.  
Two-quantity comparisonAn asset costs ₹ 3,00,000.
Quantity I: total SLM depreciation for 3 years (residual ₹ 30,000, life 6 years)
Quantity II: total WDV depreciation for 3 years at 20%

Correct Answer: B [Quantity I < Quantity II]

Explanation:

QI = 45,000 × 3 = 1,35,000; QII = 3,00,000 − 1,53,600 = 1,46,400.

9.  
Assertion–Reason
A: A change from SLM to WDV is applied only from the year of change onwards.
R: AS 10 treats a change in the depreciation method as a change in accounting estimate.

Correct Answer: C [Both A and R are true and R explains A]

Explanation:

Changes in estimates are applied prospectively (AS 5).

10.  
Reverse questionAn asset depreciated by ₹ 9,000 a year (SLM) was sold after exactly 4 years for ₹ 61,000 at a profit of ₹ 5,000. Its cost was:

Correct Answer: D [₹ 92,000]

Explanation:

BV = 61,000 − 5,000 = 56,000; cost = 56,000 + 36,000 = 92,000.

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