The following information was available for the disposal of a machine.
-accumulated depreciation: $ 45000
-profit on disposal: $ 8100
-sale proceeds $ 75600
What was the original cost of the machine?
A $22 500
B $38 700
C $112 500
D $128 700
A motor vehicle was purchased for $12000 on 1 January 2015. Its estimated residual value was $7000 and expected life 5 years. Depreciation was calculated on a month-by-month basis using the straight-line method.
It was sold on 30 June 2017 and there was a loss on disposal of $2560.
What were the sale proceeds?
Adam's financial year ends on 31 December 2017.
On 1 January 2017 the net book value of machinery was $20 000.
On 30 June 2017 he purchased a new machine for $6000. He paid 50% of the cost in cash and the balance by part exchange of an old machine, which had a net book value of $2500 on that date.
He depreciates his machinery by 20% per annum on the net book value calculated on a time basis.
What is the net book value of the machinery shown in the statement of financial position on 31 December 2017?
A business has a year end of 31 December. It purchased a non-current asset on 1 January 2014 for $100000. It was depreciated using the reducing balance method at 20% per annum. It was sold for $40000 on 1 January 2016.
What was the loss on disposal?
A trader purchased a motor vehicle costing $36 000 on 1 July 2016. The estimated useful life of the motor vehicle was five years and the estimated residual value was $6000. Depreciation is provided on a month-by-month basis using the straightine method.
The motor vehicle was sold on 31 March 2018 for $22 500.
What was the profit or loss on disposal of the motor vehicle?
A $900 loss
B $900 profit
C $3000 loss
D $3000 profit
A business buys a non-current asset and decides to apply the straight-line method of depreciation. The accountant forgets to include an estimate of scrap value in the calculation.
Which statements are correct?
1 The annual depreciation charge is too high.
2 The annual depreciation charge is too low.
3. There is likely to be a loss on disposal in the future.
4 There is likely to be a profit on disposal in the future.
During the year ended 31 December 2012 a business purchased a vehicle for $23500. On 30 September 2015 it was sold for $3500. Depreciation was charged at 20% per annum using the straight line method. A full year’s depreciation was charged in the year of purchase and the year of disposal.
What was the profit or loss on disposal of the vehicle?
A $1200 loss
B $1200 profit
C $5900 loss
D $5900 profit
Which accounting concepts apply to depreciation?
3 money measurement
A 1,2 and 4
Why is depreciation provided on non-current assets?
A so that the cost is allocated to periods that benefit from them
B so that the business entity concept is applied
C so that there is enough cash in the business to replace them
D so that they are shown at market value
Daphne buys a non-current asset for $10000. It has an estimated life of two years and a scrap value of $2000. She is considering whether to depreciate it using the straight-line method or to use the reducing balance method at a rate of 60% per annum.
Which statements are correct?
1 The profit for the year in Year 1 is higher if the reducing balance method is chosen.
2 The profit for the year in Year 1 is higher if the straight-line method is chosen.
3 The profit on disposal at the end of Year 2 is higher if the reducing balance method
4 The profit on disposal at the end of Year 2 is higher if the straight-line method is chosen.
What are causes of depreciation on non-current assets?
1. change in its cost of repair
2 change in its market value
3. changes in technology
B 1 only
A business has an accounting year-end of 31 March. It purchased a car on 1 April 2014 for $15 000. The car was sold on 30 September 2017 for $5000.
Depreciation is charged at 20% per annum. A full year’s depreciation is charged in the year of purchase. No depreciation is charged in the year of sale.
What was the profit or loss on disposal?
A loss of $500
B loss of $1000
C profit of $500
D profit of $1000
June purchased a new machine. She depreciated it at a rate of 40% per annum using the reducing balance method. After two years its net book value was $3600.
What was the purchase price of the machine?
What is the purpose of depreciation?
A to allocate the cost of the assets over their lives
B to improve liquidity ratios of the business
C to provide sufficient funds to replace the assets
D to show the assets at their market values
The accounting year of a company ends on 31 December. It purchased a warehouse for $100 000 on 1 January 2013. The warehouse had an estimated useful economic life of 25 years. The company’s ccounting policy is to depreciate the warehouse using the straight-line method. On 1 January 2018, the warehouse was revalued at $120000.
What was the depreciation charge for the year ended 31 December 2018?
Which non-current asset is most likely to be depreciated using the revaluation method?
A loose tools
B motor vehicles
C office equipment
D plant and machinery
Which item should be treated as capital expenditure?
A cost of carriage on the purchase of a non-current asset
B cost of replacement of part of a non-current asset
C depreciation of a non-current asset
D repairs to a non-current asset