Financial AccountingNon-Current Assets- Exercise

1. Which of the following should be included in the reconciliation of the carrying amount of tangible non-current assets at the beginning and end of the accounting period?

1. Additions
2. Disposals
3. Depreciation
4. Increases/decreases from revaluations

2. An asset register showed a carrying amount of $67,460.

A non-current asset costing $15,000 had been sold for $4,000, making a loss on disposal of $1,250. No entries had been made in the asset register for this disposal.

What is the correct balance on the asset register?

3. Alpha sells machine B for $50,000 cash on 30 April 20X4.

Machine B cost $100,000 when it was purchased and has a carrying amount of $65,000 at the date of disposal.

What are the journal entries to record the disposal of machine B?

4. The carrying amount of a company’s non-current assets was $200,000 at 1 August 20X0.

During the year ended 31 July 20X1, the company sold non-current assets for $25,000 on which it made a loss of $5,000.

The depreciation charge for the year was $20,000. What was the carrying amount of noncurrent assets at 31 July 20X1?

5. B acquired a lorry on 1 May 20X0 at a cost of $30,000.

The lorry has an estimated useful life of four years, and an estimated resale value at the end of that time of $6,000.

B charges depreciation on the straight-line basis, with a proportionate charge in the period of acquisition.

What will the depreciation charge for the lorry be in B’s accounting period to 30 September 20X0?

6. What are the correct ledger entries to record an acquisition of a non-current asset on credit?

7. Which of the following should be disclosed for tangible non-current assets according to IAS 16 Property, plant and equipment?

1. Depreciation methods used and the total depreciation allocated for the period
2. A reconciliation of the carrying amount of non-current assets at the beginning and end of the period
3. For revalued assets, whether an independent valuer was involved in the valuation
4. For revalued assets, the effective date of the revaluation

8. Which of the following best explains what is meant by ‘capital expenditure’?

9. Which one of the following assets may be classified as a non-current asset in the financial statements of a business?

10. A manufacturing company receives an invoice on 29 February 20X2 for work done on one of its machines.

$25,500 of the cost is actually for a machine upgrade, which will improve efficiency.

The accounts department do not notice and charge the whole amount to maintenance costs.

Machinery is depreciated at 25% per annum on a straight-line basis, with a proportional charge in the years of acquisition and disposal.

By what amount will the profit for the year to 30 June 20X2 be understated?