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Taxn201 - Quiz 8

Terms in this set (10)

Which of the following is not an allowable method of calculating depreciation for tax purposes:
1. The yield-to-maturity method
2. The straight-line method
3. The pool method
4. The diminishing value method

1. The yield-to-maturity method
In order to claim depreciation on an asset, the asset must be:
1. Held in the organisation for at least one year
2. Used or available for use in the income year
3. Owned solely by one party
4. Not away for repair for more than two months

2. Used or available for use in the income year
Which of the following is the correct way to apportion depreciation for tax purposes:
1. Months of ownership
2. Days of ownership
3. On the basis of days used in the year
4. No apportionment is permitted

1. Months of ownership
Which of the following is least likely to be depreciable property:
1. Office chairs purchased for $10,000 used in an office meeting room
2. A machine purchased for $8,000 used to polish furniture in a factory
3. A painting by a well-known New Zealand artist that is held in the office reception. It was purchased for $20,000 five years ago and is now valued at $35,000.
4. Computer equipment purchased for $12,000


3. A painting by a well-known New Zealand artist that is held in the office reception. It was purchased for $20,000 five years ago and is now valued at $35,000.
The threshold for low-value asset depreciation as at June 2020 is:
1. $0
2. $1,000
3. $5,000
4. $500

3. $5,000
Which of the following statements is incorrect:
1. Once you have chosen a depreciation method for an asset, it cannot be changed
2. You must use the diminishing value rates when using the pool method for depreciation
3. Depreciation rates are set by Inland Revenue


1. Once you have chosen a depreciation method for an asset, it cannot be changed
Which of the following statements is correct:
1. All proceeds received from the sale of an asset that are above the adjusted tax value are not taxable, as they are capital gains
2. No depreciation deduction is claimed in the year that an asset is sold
3. All proceeds received from the sale of an asset that are above the adjusted tax value are taxable as income
4. Depreciation is claimed in the year that an asset is sold


2. No depreciation deduction is claimed in the year that an asset is sold
An asset purchased for $20,000 on 1 April 2015 has an adjusted tax value of $16,000 on 1 April 2019. It is sold on 1 October 2019 for $14,000. This results in:
1. A capital gain of $2,000
2. Depreciation recovery income of $2,000
3. A loss on disposal of $2,000
4. A loss on disposal of $6,000


3. A loss on disposal of $2,000
An asset was purchased on 1 November 2019 for $10,000. Using the diminishing value rate of 15%, what is the allowable depreciation amount that may be claimed for the income year ending 31 March 2020:
1. $625.00
2. $500.00
3. $1,500.00
4. $750.00

1. $625.00
Some office furniture is pooled for tax purposes. The diminishing value rate for the pool is 20%. The opening adjusted tax value is $20,000 at 1 April 2019. On 1 October 2019, new furniture is added to the pool worth $10,000. What is the amount of depreciation that can be claimed in the year:
1. $5,000
2. $10,000
3. $3,000
4. $6,000

1. $5,000
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