Exam 10: Noncurrent Assets

Brown Ltd purchased a machine on the first day of the financial period, 1 July 2015, for $100 000. The machine was depreciated using the reducing balance method and a rate of 20 per cent. It was sold on 1 July 2016. If the machine was sold for $70 000 on 1 July 2017, what was the gain or loss on disposal?

A machine purchased on 1 July 2016 cost $100 000 and has a zero estimated salvage value. The useful life of the machine is five years. If the machine was sold on 30 September 2018, what would its net book value be?

The purpose of depreciation is to:

When a company sells machinery at a price equal to its book value, this transaction will be recorded with an entry that would include which of the following?

Equipment with a cost of $15 000 and accumulated depreciation of $12 500 was sold for $1700. The journal entry to record the disposal would include:

Norman Ltd purchased a motor vehicle for $45 000 on 1 July 2015. The vehicle was expected to have a four-year life span. The financial period ends on 30 June. Assuming Norman Ltd used the reducing balance method of depreciation and a rate of 40 per cent, the balance of the accumulated depreciation account at 30 June 2017 was:

Delta Ltd purchased a motor vehicle for $45 000 on 1 January 2016. The vehicle was expected to have a life of three years and an estimated disposal value of $15 000. The straight-line method of depreciation is employed and the financial year ends on 30 June. What was the balance of the accumulated depreciation account at 30 June 2017?

Creep Ltd purchased a machine for $100 000 on 1 January 2016. It has an estimated useful life of five years. Creep Ltd's financial period ends on 31 December. The machine was depreciated using the reducing balance method at 60 per cent. What was the depreciation expense for year ended 31 December 2017?

Consider the following transactions: Which of the above transactions increases profits?

Tanner Ltd purchased an item of equipment on the first day of the financial period, 1 July 2015, for $200 000. The equipment was depreciated using the reducing balance method and a rate of 40 per cent. It was sold on 1 July 2017. If the machine was sold for $59 000 on 1 July 2016, what was the gain or loss on disposal?

Brown Ltd purchased a machine on the first day of the financial period, 1 July 2015, for $100 000. The machine was depreciated using the reducing balance method and a rate of 20 per cent. It was sold on 1 July 2016. If the machine was sold for $60 000, what was the gain or loss on disposal?

Which piece of information is NOT necessary in order to compute straight-line depreciation?

On 1 January 2015, a new motor vehicle with a useful life of four years and an estimated trade-in value of $12 000 was purchased by a business for $54 000. The straight-line method is employed and the financial year ends on 31 December. What was the net book value at 31 December 2017?

Which of the following would NOT be included in property, plant and equipment?

Tanner Ltd purchased an item of equipment on the first day of the financial period, 1 July 2015, for $200 000. The equipment was depreciated using the reducing balance method and a rate of 40 per cent. It was sold on 1 July 2017. If the machine was sold for $65 000, what was the gain or loss on disposal?

Jacques Ltd purchased a computer for $4500 on 1 July 2015. It had an estimated useful life of three years. It was depreciated using the straight-line method. The financial year ends on 30 June. What was the accumulated depreciation at 30 June 2017?

Which of the following would NOT be included in the cost of a new building?

Norman Ltd purchased a motor vehicle for $45 000 on 1 July 2015. The vehicle was expected to have a four-year life span. The financial period ends on 30 June. Assuming Norman Ltd used the reducing balance method of depreciation and a rate of 40 per cent, the depreciation expense for the year ending 30 June 2017 is:

A used machine with a purchase price of $75 000, requiring an overhaul costing $8000, installation costs of $4000 and testing costs of $2000, would have a cost basis of:

Speedy Ltd purchased a delivery truck on 1 July 2014 for $450 000. It had an estimated salvage value of $150 000. The estimated number of kilometres to be driven was 150 000 km. The truck was depreciated using the units-of-production method. Speedy Ltd's financial period ends on 31 December. The truck was driven the following distances: during 6 months to 31 December 2014, 25 000 km; during 12 months to 31 December 2015, 75 000 km; and during 12 months to 31 December 2016, 40 000 km. What was the balance of accumulated depreciation at 31 December 2015?