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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2⟩ Which are the methods of depreciation?

Types of Depreciation

1) Straight Line Method

2) Written down value 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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4⟩ Tell me why do we calculate loans & advance on the asset side of the balance sheet?

advances on asset side are those advances which are paid for now but realize at future date. so it is an assets to the company. And Loan on assets side ate those loans which are given by the company and to be recovered in future with interest. so it is an asset to the company.

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5⟩ What is the current rate(%) of PF and ESI in private ltd. company?

PF Contribution Rate : 12 % by employee & 12 % by Company on BASIC SALARY + DA + HRA

ESI Contribution Rate : 1.75% by Employee & 4.75 % by Company on BASIC SALARY + DA + HRA

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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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9⟩ What is asset book and what are the mandatory setups for this & what are the validation types in Fixed assets?

Fixed asset is which ever item is not transferable into cash easily is nothing but fixed asset

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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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12⟩ Explain what is asset accounting in sap fico?

Asset Accounting component in SAP is meant for managing and supervising fixed assets and their values.

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13⟩ Tell me what is the difference between the different depreciation methods?

In Revaluation Method,the amount of depreciation at the end will be deducted from the beginning Eg. Bottles,Tools.....

In sinking fund method, the amount of depreciation will be invested outside the business & this will be used for Replacement of Asstes,Buying a new assets.

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14⟩ Tell me what experience have you had in fixed assets accounting?

Fixed asset means it gives long term benefits to the organisation by year end we should find the accurate value of the asset for this purpose we must calculate the depreciation.

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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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16⟩ Tell me what are the various means of calculating depreciation?

Straight Line - divide the NBV by the number of periods of it's useful life. 4-4-5 - similar to straight line but calculated by number of weeks in a period.

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17⟩ Explain can a rental expense for equipment be treated as Construction in Progress?

Yes, as it will be added to the cost of the project

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18⟩ Explain what is the difference between book depreciation and derived depreciation?

Book depriciation is that which we follow the method or book the depriciation. And derived depriciation is that which is already held the method or derived the rate of method of depriciation.

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19⟩ What is meaning General Reserve?

general reserve: it is an appropriation of profit

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20⟩ What is the role of General Reserve in Company & What time this is used and for What purpose?

role: general reserve is created in-order to meet the future known and un-known liabilities....

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Fixed Assets

Home Business and Economy Fixed Assets

46 Fixed Assets Questions And Answers

1⟩ Explain Straight Line Depreciation Calculation?

2⟩ Which are the methods of depreciation?

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

4⟩ Tell me why do we calculate loans & advance on the asset side of the balance sheet?

5⟩ What is the current rate(%) of PF and ESI in private ltd. company?

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

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?

8⟩ Explain what is capitalization of Fixed Assets?

9⟩ What is asset book and what are the mandatory setups for this & what are the validation types in Fixed assets?

10⟩ Explain about customization of Depreciation areas?

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

12⟩ Explain what is asset accounting in sap fico?

13⟩ Tell me what is the difference between the different depreciation methods?

14⟩ Tell me what experience have you had in fixed assets accounting?

15⟩ What is Depreciation?

16⟩ Tell me what are the various means of calculating depreciation?

17⟩ Explain can a rental expense for equipment be treated as Construction in Progress?

18⟩ Explain what is the difference between book depreciation and derived depreciation?

19⟩ What is meaning General Reserve?

20⟩ What is the role of General Reserve in Company & What time this is used and for What purpose?

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Fixed Assets

Home Business and Economy Fixed Assets

46 Fixed Assets Questions And Answers

1⟩ Explain Straight Line Depreciation Calculation?

2⟩ Which are the methods of depreciation?

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

4⟩ Tell me why do we calculate loans & advance on the asset side of the balance sheet?

5⟩ What is the current rate(%) of PF and ESI in private ltd. company?

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

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?

8⟩ Explain what is capitalization of Fixed Assets?

9⟩ What is asset book and what are the mandatory setups for this & what are the validation types in Fixed assets?

10⟩ Explain about customization of Depreciation areas?

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

12⟩ Explain what is asset accounting in sap fico?

13⟩ Tell me what is the difference between the different depreciation methods?

14⟩ Tell me what experience have you had in fixed assets accounting?

15⟩ What is Depreciation?

16⟩ Tell me what are the various means of calculating depreciation?

17⟩ Explain can a rental expense for equipment be treated as Construction in Progress?

18⟩ Explain what is the difference between book depreciation and derived depreciation?

19⟩ What is meaning General Reserve?

20⟩ What is the role of General Reserve in Company & What time this is used and for What purpose?

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