Financial AccountingNon-Current Assets- Exercise

1. 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?

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. David is entering an invoice for a new item of equipment in the accounts. The invoice shows the following costs:
Water treatment equipment $ 39,800
Delivery   $ 1,100
Maintenance charge $ 3,980
Sales tax $ 7,854
Invoice total    $ 52,734

David is registered for sales tax. What is the total value of capital expenditure on the invoice?

4. A car was purchased by a newsagent business in May 20X0 for:
Cost         $ 10,000
Road tax $       150
Total        $ 10,150
The business adopts a date of 31 December as its year end. The car was traded in for a replacement vehicle in August 20X3 at an agreed value of $5,000.

It has been depreciated at 25% per annum on the reducing balance method, charging a full year’s depreciation in the year of purchase and none in the year of sale.

What was the profit or loss on disposal of the vehicle during the year ended December 20X3?

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

6. The plant and machinery at cost account of a business for the year ended 30 June 20X4 was as follows:

                                                                  PLANT AND MACHINERY – COST

The company’s policy is to charge depreciation at 20% per year on the reducing balance basis, with proportionate depreciation in the years of purchase and disposal.
What should be the depreciation charge for the year ended 30 June 20X4?

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

8. Which one of the following would occur if the purchase of computer stationary was debited to the computer equipment at cost account?

9. Which one of the following statements correctly defines non-current assets?

10. An organisation’s asset register shows a carrying amount of $145,600. The non-current asset account in the nominal ledger shows a carrying amount of $135,600.

The difference could be due to a disposed asset not having been deducted from the asset register. Which one of the following could represent that asset?