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Describe two basic… (Class 12 Accountancy SQP 2023-24, Q34)

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AccountancyCBSE Class 12 · Sample paper, session 2023-24 · 6 marks · Long answer

CBSE Class 12 Accountancy sample paper 2023-24: question 34

From the official CBSE sample question paper for 2023-24, section B-II, question 34, for 6 marks. Try it first; the hints and our step-by-step solution are below.

Q34 · 6 marks · Long answerUse of Spreadsheet in Business Applications

Describe two basic methods of charging depreciation. Differentiate between both of them.

Source: official sample paper from cbseacademic.nic.in (PDF). See it in the full Sample paper 2023-24.

Hints

Open one hint at a time and try again before the next.

Hint 1

Is the depreciation figure the same every year or does it shrink?

Hint 2

What is the rate applied to: the original cost or the current book value?

Step-by-step solution

Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.

  1. Straight line method: a fixed amount of depreciation is charged every year, worked out from the asset's cost, salvage value and useful life.

    1 mark

  2. Written down value method: a fixed rate is applied to the asset's book value at the start of each year, so the charge falls every year (also called the declining balance method).

    1 mark

  3. Differences. (1) Amount: equal every year under SLM; decreasing every year under WDV. (2) Base: original cost under SLM; book value each year under WDV.

    2 marks

  4. (3) Book value can reach zero under SLM but never under WDV. (4) The rate is usually lower under SLM and higher under WDV. (5) SLM suits assets with low repairs and little risk of obsolescence; WDV suits assets that become obsolete quickly with changing technology.

    2 marks

Answer: SLM charges a fixed amount on original cost; WDV charges a fixed rate on the falling book value. Differences: amount (equal vs falling), base (cost vs book value), book value reaching zero, rate (lower vs higher), suitability

Where the marks are

  • Straight line method explained (1 mark)
  • Written down value method explained (1 mark)
  • Any four differences (4 marks)

Revise the chapter

Practise this chapterBoard-style questions from Use of Spreadsheet in Business Applications, one at a time, marked against the answer key and marking points.Back to the full paperSample paper 2023-24: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.