Practise 31 real Federal Board questions on Depreciation and Amortization from 2023 to 2026. See the answer and explanation as soon as you answer.
Depreciation and Amortization is one of the 10 main chapters in our Federal Board I.Com Accounting question bank (12th class), and about 8% of its real questions come from it. Tayyari Karo has 31 real questions on this chapter from 2023 to 2026; 15 are multiple choice and marked instantly, and the rest are short and long questions with a model answer. By difficulty: 16 medium, 9 easy, 6 hard.
Work through the questions below, then open the explanation for each one. Redo the ones you missed a few days later.
These are real past-paper questions. Think of your answer first, then open the explanation.
Decrease in the value of an asset due to change in habit or taste of people is called:
Answer: C. Obsolescence
Obsolescence is the decline in value of an asset because it becomes outdated due to changes in fashion, technology, or people's tastes, even though it may still be physically usable.
If original cost of an asset is Rs.10000, rate of depreciation 10%, then the value of depreciation under diminishing balance method after third year will be:
Answer: D. Rs.810
Book value after year 1 = 10,000×0.9=9,000; after year 2 = 9,000×0.9=8,100; depreciation in year 3 = 10% × 8,100 = Rs.810.
In fixed installment method, depreciation is calculated on:
Answer: B. Original cost
Under the fixed installment (straight-line) method, a constant amount of depreciation is calculated each year on the original cost of the asset.
Decline in the value proportionate to the quantum of production is called:
Answer: B. Depletion
Depletion is the decline in value of a wasting asset in proportion to the quantity extracted/produced.
Original cost of assets Rs.45,000, scrap value Rs.3,000, useful life of asset 7 years, then the annual value of depreciation will be:
Answer: A. Rs.6000
Annual depreciation (straight line) = (Cost − Scrap value)/Useful life = (45,000−3,000)/7 = 42,000/7 = Rs.6,000.
Depreciation of an asset should not exceed:
Answer: B. Depreciable value
Total depreciation charged over an asset's life should not exceed its depreciable value (cost minus scrap/residual value).
Differentiate between "Depreciation" and "Fluctuation" (Any three).
(1) Depreciation applies to fixed/tangible assets; Fluctuation mainly applies to current assets or investments.
(2) Depreciation is a gradual, permanent, one-directional decrease; Fluctuation can move up or down and may be temporary.
(3) Depreciation is charged as an expense every period; Fluctuation is adjusted through revaluation (e.g. lower of cost or market value), not a fixed periodic charge.
Differentiate between 'Original cost method' and 'Reducing balance method'. (Any three)
(1) Under the Original cost (fixed installment) method, depreciation is calculated as a fixed percentage on the original cost each year; under the Reducing balance method, it is calculated as a fixed percentage on the reducing book value.
(2) Original cost method gives a constant/equal annual depreciation charge; Reducing balance method gives a higher charge in early years, decreasing over time.
(3) Under original cost method the book value can reach zero/scrap value exactly; under reducing balance method the book value never reaches exactly zero.
| Session | Questions |
|---|---|
| 2026 Annual | 6 |
| 2025 1st Annual | 7 |
| 2025 2nd Annual | 6 |
| 2024 Annual | 9 |
| 2023 Annual | 3 |
31 real Federal Board (FBISE) Accounting questions on Depreciation and Amortization from 2023 to 2026, for 12th class. Each one shows the session it came from.
No. We could not find an official FBISE marking scheme for these papers, so the answers and explanations are written by Tayyari Karo for practice. Check anything important with your teacher or textbook.
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