Depreciation & other Terminology (Plant & Machinery) Page 1 of 8

Keywor ds: Deprecia ti on under Income Ta x Ac t, 1961 as well as Companies Ac t 2 013 , Ins talled Capa ci ty o f th e
Plan t, Ac tual P roduc tion , Ra w Ma te rial Avai labili ty, Le vel of Technolog y , Pa rt, Frac ti on and Whole Valua tion ,
Rela tions hip o f Earnin gs and Asse ts , Business Specific Economic Viabil i ty and Economic Obsolescence , Efficienc y
of Plan t La you t & Imbalances in diffe ren t p roduc tion secti ons
x

x
x

1 Deprec ia tion is a…
A Meas ure of consump tion of asse ts
B Process of alloca tion of cos t and no t of valua tion
C Wear and tear due to use and/or lapse of ti me
D Al l of the a bove
2 Whic h of the following does not influence the useful life of an asset?
A Expec ted ph ysical wea r and tear
B Cos t of the asset
C Obs olescence
D Legal o r o ther li mi ts on the use of the asse t
3 For computing depr ecia tion of an asset, the factors tha t are ta ken into considera tion inc lude the
following except…
A His to rical cos t
B Insura nce premium
C Expec ted us eful li fe
D Es tima ted residual value
4 Deprec ia tion on pla nt a nd machiner y is…
A No t a cas h cos t, so is ignored in the cos t accoun ts
B Part o f manu fac tu ring o ve rheads
C Par t of pr ime cos t
D Al wa ys calcula ted using the s traigh t-line me th od
5 Whic h of the following methods of deprecia tion results in fixed per unit cos t of deprecia tion?
A S tra ight line
B Reducing balance
C Sinking fund
D Produc tion uni t
6 Obs olescence is the measure of the loss of va lue of an asset due to…
A Tec hnologica l innova tion
B Changes in marke t condi tions
C Bo th (a) and (b) above
D None o f the above
7 To ta l deprecia tion of a n asset ca nnot exceed its…
A Scra p va lue
B Res idual value
C Marke t value
D Depreciable value
8 Whic h of the following is not a method of charging deprecia tion?
A S traigh t line Me thod
B Wri tte n do wn value Me thod
C Disc ounted present va lue Method
D Sum o f digi ts Me th od
Valuation of Plant & Machinery : Sanjay Patel : +91 96246 69492 : swamibeic@gmail.com
201, Vasundhara Apartment, Opposite M K High School, Alkapuri, Vadodara, Gujarat, India
(please ignore typographical or grammatical or other error, if any)
 Depreciation & other Terminology (Plant & Machinery) Page 2 of 8

9 Whic h of the following s ta tements bes t descr ibes the pur pose of deprecia tion?
A Regular reduc tion of asse t value to correspond to changes in marke t value as the asse t ages
B A p roces s of correla ti ng the marke t value of an asse t wi th i ts g radual decline in ph ysical
Efficienc y
C Al loca tion o f cos t in a manne r tha t will ensure tha t Plan t and Eq uipmen t i te ms are not carried on
th e Balance Shee t in e xcess of ne t realiz able value
D Al loca tion of the cos t of a n asset to the per iods in which ser vices are received fr om the asset
10 The ma in objective of pr oviding deprecia tion is to…
A Calcula te the true p rofi t
B S how the tr ue financia l position in the Balance Sheet
C Pro vide funds for replacemen t of fi xed assets
D Bo th (a) and (b) above
11 Deprec ia tion is a process of…
A Va lua ti on
B Va lua ti on and alloca tion
C Al loca tion
D Ap p rop ria tion
12 The a ccounting process of gradua lly conver ting the unexpired cos t of fixed assets into expenses
over a ser ies of accounting per iods is…
A Deprec ia tion
B Ph ys ical de te riora tion of the asse t
C Decreas e in marke t value of the asse t
D Va lua ti on o f an asse t a t a poin t of ti me
13 Deprec ia tion is ca lcula ted on the…
A Cos t p rice o f asse t
B Marke t p rice
C Cos t + Tr ans por t + Ins ta lla tion expenses
D Cos t or marke t values whiche ver is less
14 Deprec ia tion is a process of…
A Va lua ti on o f fi xed asse ts
B Al loca tion of cos t over the useful life of assets
C Genera ting funds replacemen ts of the asse ts
D Avo idance of ta x
15 Proper ty, P lant a nd Equipment ar e conventiona lly pr esented in the Ba lance S heet a t…
A Replacemen t cos t – Accumula ted Dep recia tion
B His to rical cos t – Sal vage Value
C His tor ica l cos t (Gross Book Va lue) – Deprecia tion por tion ther eof
D Original cos t adjus ted for general p rice -le vel chan ges
16 A c ha nge in Deprecia tion Method under accounting s ta ndar d is trea ted as…
A Cha nge in Accounting Policy
B Prior-Peri od Adjus ting
C Change in Accoun ting S tandards
D Al l the th ree
17 The Pr imar y objecti ve of providing deprecia tion is…
A To calcula te true profi t
B To s how the asset on fa ir / mar ket va lue
Valuation of Plant & Machinery : Sanjay Patel : +91 96246 69492 : swamibeic@gmail.com
201, Vasundhara Apartment, Opposite M K High School, Alkapuri, Vadodara, Gujarat, India
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 Depreciation & other Terminology (Plant & Machinery) Page 3 of 8

C To reduce ta x Bu rdon
D To p ro vide funds for replacemen t
18 Under whic h method of deprecia tion a nnua l deprecia tion goes on decreas ing…
A Reduc ing ba la nce method
B S traigh t line me th od
C An nui ty me thod
D None
19 Under whic h method of deprecia tion a nnua l deprecia tion fluctua te wi th the volume of produc tion…
A Sum o f Yea rs‘ Digi t Me thod
B Unit of Pr oduction Method
C Wri tte n Do wn Value Me thod
D None
20 Whic h of these expenses does not res ult in cash outflo w?
A Deprec ia tion
B In te res t on Loa n
C Pa ymen t on Di vidend
D Dona tion
21 Mr. A purc hased a new pla nt a nd machiner y f or Rs. 50,000 on 01. 01.2 012. The machiner y was
received in the factor y on 10.01.2 012 and was ins talled a nd put to use on 18.01.2 012. Deprec ia tion
on the pla nt a nd ma chiner y will commence fr om…
A 01. 04.2 011
B 01. 04.2 012
C 01. 01.2 012
D 18.01.2 012
22 Whic h method of depreca tion is a llowed under Income Ta x, 1961?
A S traigh t line me th od
B Wr itten down va lue method
C Uni t o f p roduc tion me thod
D Al l o f ab o ve
22 Whic h method of depreca tion is a llowed under The Compa nies Act, 2 013?
A S traigh t line me th od
B Wri tte n do wn value me thod
C Uni t o f p roduc tion me thod
D Al l of a bove
23 Under Income Ta x, 1961, depr ecia tion of assets is based on…
A Remaining useful li fe in yea r
B Ra te of deprecia tion in %
C Us eful li fe in year
D Scrap value of asse t
24 Under The Compa nies Act, 2 013 , deprecia tion of assets is based on…
A Remaining useful li fe in yea r
B Ra te o f dep recia tion in %
C Us eful life in year
D Scrap value of asse t
25 Under Income Ta x, 1961, depr ecia tion of assets is based on…
A Indi vidual asse t
Valuation of Plant & Machinery : Sanjay Patel : +91 96246 69492 : swamibeic@gmail.com
201, Vasundhara Apartment, Opposite M K High School, Alkapuri, Vadodara, Gujarat, India
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 Depreciation & other Terminology (Plant & Machinery) Page 4 of 8

B Gro up o f as sets
C Bloc k of Assets
D Al l o f ab o ve
25 Under The compa nies Act, 2 013 , deprecia tion of assets is based on…
A Individua l asset
B Gro up o f as sets
C Block o f As s e ts
D Al l o f ab o ve
26 Under Income Ta x, 1961, ho w ma ny block of assets is define for fixed asset?
A 10
B 14
C 13
D 12
27 Under Income Ta x, 1961, ho w ma ny block of assets is define for compa ny’s asset?
A 10
B 14
C 13
D 12
28 Componenti za tion of asset is based on…
A Us eful li fe
B Iden ti fiable pa rt of asse t
C Cos t o f par t of asse t
D Al l of a bove
29 Under The compa nies Act, 2 013, useful life of th erma l power pla nt is defined as…
A 30 yea rs
B 40 yea rs
C 35 yea rs
D 45 yea rs
30 Whic h one of following is defined as amount by which the carr ying amount of a n asset exc eeds its
rec overa ble amount?
A Scrap value
B Marke t value
C Sal vage value
D Impa irment loss
31 Whic h of the following is cons idered to es tima te net book va lue?
A Gr oss book va lue
B Reins ta temen t va lue
C Replacemen t Cos t Ne w
D Marke t Value
32 Unit of ma ximum production a ccor ding to the ma nufa cturer's specifica tion of equipment is known
as…
A Ins ta lled ca pacity
B Ac tu al prod uc tion
C Licens ed capacity
D U tiliz a tion capaci ty
33 Va luing a ll machines individua lly out of gr oup of machines in a plant is known as
Valuation of Plant & Machinery : Sanjay Patel : +91 96246 69492 : swamibeic@gmail.com
201, Vasundhara Apartment, Opposite M K High School, Alkapuri, Vadodara, Gujarat, India
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 Depreciation & other Terminology (Plant & Machinery) Page 5 of 8

A Part
B Fr ac tion
C Whole
D Part and Frac ti on
34 A method in which the par ts or sections of asset/ machiner y a re individua lly deprec ia ted a t
different r a tes…
A Separa tio n
B Componen tiz a tion
C Iden ti fica ti on
D Frac tio n
35 The ma ximum productive capacity of a pla nt reduced by the predicta ble a nd una voidable fac tors
of interr uption per taining to inter na l ca uses is ca lled…
A Ins ta lled ca pacity
B Ac tu al capaci ty
C Licens ed capacity
D U tiliz a tion capaci ty
36 The pr oduction capa city of the pla nt for which license has been issued by a n a ppr opr ia te
a uthority is ca lled…
A Ins talled capaci ty
B Ac tu al capaci ty
C Lic ensed ca pacity
D U tiliz a tion capaci ty
37 The volume of production achieved in rela tion to ins ta lled capa city is ca lled…
A Mass produc tion
B Efficienc y
C Vo lume o f p roduc ti on
D Capaci ty u tiliz a ti on
38 Una va ila bility of r a w ma ter ia l ca n a ffect the va lua tion…
A No
B Yes
C Canno t s a y
D None o f abo ve
39 Una va ila bility of r a w ma ter ia l can a ffect in a doption of r ema ining useful life of machine for th
va lua tion…
A No
B Yes
C Canno t s a y
D None o f abo ve
40 Va luing a ll machines which is integra te wi th the whole & dependent upon the whole is known as…
A Par t
B Frac tio n
C Whole
D Part and Frac ti on
41 Va lua tion of entire bundle of r ights a proper ty i s known as…
A Part
B Frac tio n

Valuation of Plant & Machinery : Sanjay Patel : +91 96246 69492 : swamibeic@gmail.com
201, Vasundhara Apartment, Opposite M K High School, Alkapuri, Vadodara, Gujarat, India
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 Depreciation & other Terminology (Plant & Machinery) Page 6 of 8

C Whole
D Part and Frac ti on
42 The r a tio tha t s hows the percentage of pr ofit a company ear ns in rela tion to i ts overa ll
resources or assets is ca lled…
A Re tu rn on p rofi t
B Re tu rn on asse t
C Gros s pro fi t
D Ne t pro fi t
43 Net inc ome of the compa ny ca n be finding fr om…
A Balance s heet
B Pro fi t & los s accoun t
C Inc ome s ta tement
D None o f abo ve
44 As s et of the compa ny ca n be finding from…
A Ba la nce s heet
B Pro fi t & los s accoun t
C Income s ta temen t
D None o f abo ve
45 Whic h ra tio is reflects profita bility or potentia l of pr ofitability?
A Re tu rn on p rofi t
B Return on asset
C Gros s pro fi t
D None o f abo ve
46 An ear ning of company is due to…
A Tangib le asse t
B In tangible asse t
C Both A & B
D None o f abo ve
47 Higher earning of compa ny compare to ca pita l inves ted in assets is due to…
A Good wil l
B Cop y righ ts
C Pa ten t
D Inta ngible assets
48 Measurement of fina ncia l per forma nce of new or exis ting pla nt to s ur vi ve is ca lled…
A Economic obsolescence
B Financial ra ti o
C Economic Via bility
D Financial indica tor
49 Loss in va lue by fa ctors exter na l to the asset, especia lly fa ctors rela ted to cha nges in s upply or
dema nd for pr oducts pr oduced by the asset is ca lled…
A Economic obsolescence
B Financial ra ti o
C Economic Viabili ty
D Financial indica tor
50 Economic Via bility is… .
A Curable
Valuation of Plant & Machinery : Sanjay Patel : +91 96246 69492 : swamibeic@gmail.com
201, Vasundhara Apartment, Opposite M K High School, Alkapuri, Vadodara, Gujarat, India
(please ignore typographical or grammatical or other error, if any)
 Depreciation & other Terminology (Plant & Machinery) Page 7 of 8

B Incu rable
C Ma y be c urable or incura ble
D None o f abo ve
51 Economic obsolescence is…
A Curable
B Inc ura ble
C Ma y be curable or incurable
D None o f abo ve
52 Tec hnique of loca ting different machines a nd plant ser vices wi thin the factor y s o tha t the
gr ea tes t possible output of high quality a t the lowes t poss ible tota l cos t can be a va ilable is
ca lled…
A Fi xed la you t
B Process la you t
C Produc t la you t
D P lant la yout
54 Whic h of following in not Character is tics of good plant la yout?
A Efficien t s pace u tiliz a tion
B Reduced dis comfor t
C Ma ximum movement
D Acc ording to s ta tu tory regula tions
55 Design of plant la yout is depends on…
A Typ es of p roduc ts
B Typ es of p rocess
C Vo lume o f p roduc ti on
D Al l of a bove
56 New pr ocess technology r equired less ca pita l inves tment a nd provide higher efficienc y c ompare
to old process technology, tha n old technology i s…
A Superio r
B Obs olete
C Bad
D Canno t s a y
57 P lant has thr ee divis ions A, B & C. Output of divis ion A is input of divis ion B. If mac hiner y of
divis ion A get ma jor br ea kdown a nd it’s r equire a bout 1 month to r ecover , while a ll mac hiner y of
divis ion B & C is in good wor king condition. Is production of plant will a ffected?
A Yes
B No
C Canno t s a y
D None o f abo ve
58 The es tima ted a mount tha t a n entity would currently obta in from disposal of the asset, a fter
deduc ting the es tima ted cos ts of disposa l, if the asset were a lrea dy of the a ge and in the
c ondition expected a t the end of its useful life is ca lled…
A Sal vage value
B Res idua l va lue
C Va lue in us e
D Va lue in exchange
59 Compa ny A is us ing electr ica l controls like rela y a nd its logic a nd Compa ny is us ing S C AD A
s ys tem for contr ol of plant & ma chiner y. Which compa ny is s uffer ing by tec hnologica l
Valuation of Plant & Machinery : Sanjay Patel : +91 96246 69492 : swamibeic@gmail.com
201, Vasundhara Apartment, Opposite M K High School, Alkapuri, Vadodara, Gujarat, India
(please ignore typographical or grammatical or other error, if any)
 Depreciation & other Terminology (Plant & Machinery) Page 8 of 8

obsolescence?
A A
B B
C A&B
D Canno t s a y
60 Adoption of r esidua l va lue more than 5% its his tor ica l cos t required…
A As s ump tion
B Proo f o f his torical cos t
C Disc losure & s uppor t
D None o f abo ve

Valuation of Plant & Machinery : Sanjay Patel : +91 96246 69492 : swamibeic@gmail.com
201, Vasundhara Apartment, Opposite M K High School, Alkapuri, Vadodara, Gujarat, India
(please ignore typographical or grammatical or other error, if any)