Fixed Assets

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“Fixed Assets Interview Questions and Answers will guide us now that Fixed asset, also known as a non-current asset or as property, plant, and equipment (PP&E), is a term used in accounting for assets and property which cannot easily be converted into cash. So learn more about the Fixed Assets with the help of this Fixed Assets Interview Questions with Answers guide and get a better job or get a preparation for a job interview of Fixed Assets based job”



46 Fixed Assets Questions And Answers

1⟩ Explain Straight Line Depreciation Calculation?

(Purchase Price of Asset - Approximate Salvage Value) Estimated Useful

Life of Asset

Example: You buy a new computer for your business costing approximately

$5,000. You expect a salvage value of $200 selling parts when you dispose of it.

Accounting rules allow a maximum useful life of five years for computers. In the

past, your business has upgraded its hardware every three years, so you think

this is a more realistic estimate of useful life, since you are apt to dispose

of the computer at that time. Using that information, you would plug it into the

formula:

($5,000 purchase price - $200 approximate salvage value) 3 years estimated

useful life

The answer, $1,600, is the depreciation charges your business would take

annually if you were using the straight line method.

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3⟩ Tell me if we do why it would not appreciate in value?

Depreciation refers to decrease in the value of assets due to fear of obsolete and use, in-fact most of the assets have limited useful life. but there are some examples like land value of which almost not depreciate because value of land not decreased and it has its unlimited life. so we can say that if the value of assets not decreased due to impact of time then its value should not be depreciated, item like antique 7 paintings normally increase as they pass the time so in my opinion it should not be depreciated.

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6⟩ Explain what are direct and indirect tax? what do you mean by appreciation of assets? Explain with an example?

Direct taxes are nothing but , collecting tax by govt directly from the specified assesses, example is Income tax , wealth tax.

Where as indirect taxes are collecting indirectly from consumers say u are bearing excise duty on all manufactured products, Examples are VAT, Excise duty , customs duty, Service tax

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7⟩ Tell me can start up costs associated with getting a new location up and running within your business be capitalized even though they are non-capital items?

As per Accounting standard 16 specified by ICAI , Borrowing cost, Interest cost even though non capital in nature which must be capitalized if they incurred for acquisition of Qualifying capital asset, but those cost shall be capitalized only up to the date of commencement of production utilizing such capital asset, Any amount of interest incurred after commencement of production shall not be capitalized and shall be debited to Profit and loss account.

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8⟩ Explain what is capitalization of Fixed Assets?

If a company purchase plant & machinery for its factory use by investing large amount of money and assume that expected life of P&M is 10 years and which generates revenve for the company more one financial year. Hence this investment cannot be treated expenses for one Financial year therefore same to be kept as fixed asset under P&M head and depricaication will be charged every year based on applicable % & transferred to profit and loss a/c.

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10⟩ Explain about customization of Depreciation areas?

Following are the steps:

1.First activate the Dep areas(book & tax) in asset class.

2.Assigng Dep key to Dep Areas either at Asset class level or Asset master data level.

3.Assign Screen layout to dep areas.

4.Determine how Dep Areas post to general ledger.

5.Assign G/L accounts.

6.Define posting rules and document type for Depriciation

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11⟩ Explain the nature and accounting treatment for fixed asset?

Once the asset is purchased it is recorded in the books of accounts by using money measurement concept. It takes in to account only the expenditure incurred for purchasing the asset.

As per the company procedures depreciation will be calculated. Depreciation fund will be maintained.

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15⟩ What is Depreciation?

Depreciation is a Gradual Diminishing or Decrease in the value of fixed assets due wear & tear, Obsolence.

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