Information Systems And Engineering Economics Set 18
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This set of Information systems and engineering economics Multiple Choice Questions & Answers (MCQs) focuses on Information Systems And Engineering Economics Set 18
Q1 | A new business was set up on15-11-2008 andit commenced its business from 1-12-2008.The first previous year in this case shall be:
- a) 15-11-2008 to 31-3-2009
- b) 1-12-2008 to 31-3-2009
- c) 2008-2009
- d) none of the above
Q2 | A person leaves India permanently on15-11-2008.The assessment year for incomeearned till 15-11-2008 in this case shall be:
- a) 2007-08
- b) 2008-09
- c) 2009-10
- d) none of the above
Q3 | 24. As per section 30, which expenditure incurred fora building used for the business or profession shallnot be allowed as deduction?
- a. rent, rates and taxes
- b. insurance of building
- c. repairs of building
- d. capital expenditure
Q4 | 25. Group of assets falling within a class of assetscomprising of tangible & intangible assets isknown as :
- a. group of assets
- b. block of assets
- c. set of assets
- d. none of these
Q5 | 27. Depreciation available, if asset is used for lessthan 180 days during the year of acquisitionshall be of block rate:
- a. 50%
- b. 20%
- c. 100%
- d)15%
Q6 | 28. If the Plant & Machinery is used for less than180 days in the year of its acquisition, then,at what rate the depreciation on that asset should beprovided under section 32?
- a. 7.5%
- b. 15%
- c. 20
- d. 10%
Q7 | If the Computer is purchased on 11th May, 2018 then at what rate depreciation will be provided on it?
- a. 60%
- b.40%
- c.30%
- d.20%
Q8 | 30. If the machinery is purchased on 4th October,2018 then at what rate depreciation will be providedon it?
- a. 60%
- b. 7.5%
- c. 15%
- d. 10%
Q9 | 31. The transfer of one or more undertakings as aresult of the sale for a lump sum considerationwithout values being assigned to the individualassets and liabilities in the sale is known as :
- a. lump sum sale
- b. slump sale
- c. aggregate sale
- d. total sale
Q10 | 32. What is the rate of depreciation charged on computer software?
- a. 40%
- b. 15%
- c. 60%
- d. 100%
Q11 | 33. _______Rate of depreciation chargeable onfully temporary wooden structure for the assessmentyear 2019-20 is
- a. 5%
- b. 10%
- c. 100%
- d. 40%
Q12 | 34. Rate of depreciation chargeable on temporarywooden structure for the assessment year 2019- 20is - A. 40% B. 10% C. 100% D. 50%.
- a. 40%
- b. 10%
- c. 100%
- d.50%
Q13 | 47. DS acquired a building for Rs. ` 15 lakh in June,2016 in addition to cost of land beneath the buildingof ` 3 lakh. It was used for personal purposes until hecommenced business in June, 2018 and since thenit was used for business purposes. The amountof depreciation eligible in his case for theassessment year 2019-20 would be -
- a. rs.` 1,50,000
- b. rs.` 75,000
- c. rs.` 37,500
- d. rs.` 1,21,500
Q14 | 51. XYZ Ltd is engaged in production of textilearticles. Opening WDV of the block of assets wasRs.` 15, 00,000. During the year, plant was acquiredunder this block on 15th June 2018 amounting toRs.` 10, 00,000. One of the asset falling within theblock was sold for Rs. ` 5, 50,000 on 14-01- 2019.Rate of depreciation of the block is 15%.Calculate the total amount of depreciation includingadditional depreciation available during the previousyear for the block. C
- a. rs.` 2,92,500
- b. rs.`4,92,500
- c. rs.` 3,92,500 88
- d. rs.` 3,52,500
Q15 | What is the rate of depreciation charged on computer software?
- a. 40%
- b. 15%
- c. 60%
- d. 100%
Q16 | Your accounting records indicate that an asset in use has a book value of $8,640. The asset cost $30,000 when it was purchased, and it has been depreciated under the 5 MACRS method. Based on the information available, determine how many years the asset has been in service.
- 5 years
- 6 years
- 4 years
- 3 years
Q17 | Which of the following statements is correct?
- the reason why the u.s. congress allows business to use macrs depreciation as opposed to conventional methods is to reduce the business tax burden over the project life.
- under the declining balance depreciation system, it is always desirable to switch to straight line depreciation.
- when determining the cost basis for an asset’s depreciation, you must include all the costs that were incurred to keep the asset in operable condition.
- the main reason why a typical firm may use a straight line depreciation method in reporting an income to outside investors (as opposed to any other accelerated tax depreciation methods) is to abide by the accounting principle—that is to report the true cost of doing business.
Q18 | Which of the following statements is correct?
- over a project’s life, a typical business will generate a greater amount of total project cash flows (undiscounted) if a faster depreciation method is adopted.
- no matter which depreciation method you adopt, total tax obligations over a project’s life remain unchanged.
- depreciation recapture equals cost basis minus an asset’s book value at the time of disposal, that is, if the salvage value is less than the asset’s cost basis.
- cash flows normally include depreciation expenses since they represent a cost of doing business.
Q19 | You purchased a computer system which cost $50,000 5 years ago. At that time, the system was estimated to have a service life of 5 years with salvage value of $5,000. These estimates are still good. The property has been depreciated according to a 5 year MACRS property class. Now (at the end of year 5 from purchase) you are considering selling the computer at $10,000. What book value should you use in determining the taxable gains?
- 8640
- 5760
- 10368
- 11520
Q20 | Gilbert Corporation had a gross income of $500,000 in tax year 1, $150,000 in salaries, $30,000 in wages, $20,000 in interest, and $60,000 in depreciation expenses for an asset purchased 3 years ago. Ajax Corporation has a gross income of $500,000 in tax year 1, and $150,000 in salaries, $90,000 in wages, and $20,000 in interest expenses. Apply the current tax rates and determine which of the following statements is correct.
- both corporations will pay the same amount of income taxes in year 1.
- both corporations will have the same amount of net cash flows in year 1.
- ajax corporation will have a larger net cash flow than gilbert in year 1.
- gilbert corporation will have a larger taxable income than ajax corporation in year 1.
Q21 | A company purchased an industrial fork-lift for $75,000 in year 0. The company expects to use it for the next 7 years after which it plans to sell it for $10,000. The estimated gross income and expenses excluding depreciation for the first year are given below. The fork-lift will be depreciated according to a 5-year MACRS.:Determine the average tax rate applicable in the first year of operation, using the current corporate tax rate schedule.
- 0.1875
- 0.1731
- 0.25
- 0.15
Q22 | What effect would have on the break-even point and expected profit if there is an increase in fixed cost?
- (decrease, decrease)
- (increase, decrease)
- (increase, increase)
- (decrease, decrease)
Q23 | What effect would have on the break-even point and expected profit if there is an increase in labor cost?
- (decrease, decrease)
- (decrease, decrease)
- (increase, decrease)
- (increase, increase)
Q24 | What effect would have on the break-even point and expected profit if there is an increase in unit price?
- (increase, decrease)
- (decrease, decrease)
- (increase, increase)
- (decrease, increase)
Q25 | What effect would have on the break-even point and expected profit if there is an increase in financing cost?
- (decrease, decrease)
- (increase, decrease)
- (increase, increase)
- (decrease, increase)