1. Tell me what are the journal entries which get passed from asset purchasing to asset retirement?
At the time of addition
Assets NA account -------dr
To asset clearing account ----CR
At the time of retirement
the nbv amount has been moved to the gain & loss account.
In sale case
we need to pass a journal entry to transfer the amount from gain & loss account cr and asset sale clearing account cr.
Loading, Unloading and Installation Charges during the time of shifting of the company cant be capitalised as such these Expenses are of (Opex) Operating Expenses nature.
3. Explain example for all depreciation methods?
Following are the depriciation methods that are used in FA module:
1. Flat rate method
2. Calculated method
3. Table method
4. Formula method
5. Production method
6. STL
7. DEMINISHING
8. Time-Hour
The expenses can only be capitalised in the following circumstances:
1. It must be related with the asset.
2. It must be essential to make the asset in working condition.
3. It must be above the capitalisation limit as per the prescribed policies.
5. Do you know how many types of fixed assets?
There are two types of fixed assets tangible and intangible assets.
Tangible assets: A physical asset whose presence can be felt and touched.
Ex. Furniture and Fixtures, Plant and Machinery
Intangible Assets: Assets whose presence cannot be felt or touched.
Ex: Goodwill, patents, trademarks.
6. Explain what is Asset life cycle?
Asset life cycle means the cycle in which the asset canprovide or help provide futureeconomic benefits. Each asset has a specific life cycle, it can be measured by evaluating the asset itself.
7. Tell me which depreciation is superior WDV or SLM and Why?
We can decided which method of deprecation is best on the basis of usefulness (benefits) provided by the asset.
When we prefer SLM:-
we preferred SLM where the equal amount of benefit is derived from the asset through the useful life of the asset. e.g A room's capacity of storing the goods remain same in each year weather old or new.
When we prefer DBM:-
we preferred DBM where resulting benefit from the asset diminishing (decreasing) year by year.
8. What is written down Value method?
Diminishing Balance Method or Written Down Value Method
Under this method, depreciation is charged at a fixed rate every year but on
reducing balance i.e., on balance reduced each year during the economic life of
the asset by the amount of depreciation till the asset is reduced to its scrap
value.
For example, if the cost of the asset is Rs. 1,000 the rate of depreciation
is 10 % on Rs. 1,000 i.e., Rs. 100, in the second year, it will be 10 % on Rs
900 i.e., Rs. 90 is the third year, it will be 10 % on Rs 810 (900-90) i.e., Rs.
81 and so on.
9. 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.
10. Which are the methods of depreciation?
Types of Depreciation
1) Straight Line Method
2) Written down value method
11. 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.
12. 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.
13. 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
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
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.
16. 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.
Fixed asset is which ever item is not transferable into cash easily is nothing but fixed asset
18. 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
19. 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.
20. Explain what is asset accounting in sap fico?
Asset Accounting component in SAP is meant for managing and supervising fixed assets and their values.
21. 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.
22. 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.
Depreciation is a Gradual Diminishing or Decrease in the value of fixed assets due wear & tear, Obsolence.
24. 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.
25. 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
26. 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.
27. 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....
28. What is meaning General Reserve?
general reserve: it is an appropriation of profit
29. How to retire an in house fixed asset in SAP when there is no revenue?
As there is no revenue you can retire the same asset.
30. How can we made calculation of Fixed Assets?
I think your question is regarding depreciation calculation.
31. Tell me How advertisement cost comes under fictitious assets?
Fictitious assets means any expendicture, the benefits which will be spread over a period of time not only to the current period. Any expendicture we made for huge advertisements resulted for a period of time. hence its is classifying as fictitious asset.
Current assets/Current Liabilities =1.5
(Current assets minus inventory)/Current Liabilities =1
Thus
Current Liabilities = 2 m
Inventory = 1 m
33. Explain what is meaning of Secured & Unsecured loan?
Secured loans are those which are borrowed from banks and other financial services, which are genrally huge amounts.
Unsecured loans are small amounts borrowed from unorganised instituion. Exapmle: Moneyborrowed from any person or a relative, where you can get the money without any security.
34. What is meant by cash book and day book and general ledger?
Bookkeeping, in business, is the recording of financial transactions, and is part of the process of accounting. Transactions include purchases, sales, receipts and payments by an individual or organization. The accountant creates reports from the recorded financial transactions recorded by the bookkeeper and files forms with government agencies. There are some common methods of bookkeeping such as the single-entry bookkeeping system and the double-entry bookkeeping system. But while these systems may be seen as "real" bookkeeping, any process that involves the recording of financial transactions is a bookkeeping process.
35. What is fictitious assets?
(Fictitious asset) An asset recorded in the balance sheet that really does not deserve to be classed as an attest . If this is intentional it may be considered fraud.
