Question 1

Where there is an asset revaluation increment that does not reverse a previous decrement, the amount of the increment is credited to:

Accepted Answer

A)  retained profits. 
B)  accumulated depreciation. 
C)  revaluation surplus. 
D)  capital. 
A)  retained profits. 
B)  accumulated depreciation. 
C)  revaluation surplus. 
D)  capital. C

Question 2

Equipment with a cost of $160 000 has an estimated residual value of $10 000 and an estimated useful life of four years. The equipment is to be depreciated by the reducing balance method (at twice the straight-line rate). What is the amount of depreciation for the first full year?

Accepted Answer

A)  $40 000 
B)  $75 000 
C)  $80 000 
D)  $85 000 
A)  $40 000 
B)  $75 000 
C)  $80 000 
D)  $85 000 C

Question 3

A machine purchased on 1 July 2019 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 2021, what would its net book value be?

Accepted Answer

A)  $45 000 
B)  $50 000 
C)  $55 000 
D)  $60 000 
A)  $45 000 
B)  $50 000 
C)  $55 000 
D)  $60 000 C

Question 4

Tanner Ltd purchased an item of equipment on the first day of the financial period, 1 July 2018, 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 2020. If the machine was sold for $59 000 on 1 July 2019, what was the gain or loss on disposal?

Accepted Answer

A)  Loss of $21 000. 
B)  Loss of $59 000. 
C)  Loss of $61 000. 
D)  Loss of $13 000. 
A)  Loss of $21 000. 
B)  Loss of $59 000. 
C)  Loss of $61 000. 
D)  Loss of $13 000.

Question 5

Equipment with a cost of $160 000 has an estimated residual value of $10 000 and an estimated useful life of four years. Using the straight-line method, what is the amount of depreciation for the first full year?

Accepted Answer

A)  $37 500 
B)  $42 500 
C)  $41 250 
D)  $40 000 
A)  $37 500 
B)  $42 500 
C)  $41 250 
D)  $40 000

Question 6

When the accumulated depreciation is deducted from the long-term asset account, the figure is known as the:

Accepted Answer

A)  market value. 
B)  net realisable value. 
C)  net book value. 
D)  None of the above. 
A)  market value. 
B)  net realisable value. 
C)  net book value. 
D)  None of the above.

Question 7

Squires Ltd purchased equipment for $90 000 on 1 July 2018. It had an estimated life of 200 000 units. The machine was depreciated using the units of production method. The financial period of Squires Ltd ends on 30 June. What was the depreciation expense for year ended 30 June 2019 if 26 000 units were produced in that year?

Accepted Answer

A)  $11 000 
B)  $11 700 
C)  $23 400 
D)  $35 100 
A)  $11 000 
B)  $11 700 
C)  $23 400 
D)  $35 100

Question 8

Brown Ltd purchased a machine on the first day of the financial period, 1 July 2018, 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 2019. If the machine was sold for $60 000, what was the gain or loss on disposal?

Accepted Answer

A)  Loss of $20 000 
B)  Loss of $40 000 
C)  Gain of $60 000 
D)  Gain of $20 000 
A)  Loss of $20 000 
B)  Loss of $40 000 
C)  Gain of $60 000 
D)  Gain of $20 000

Question 9

On 1 January 2018, 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 depreciation expense for year ended 31 December 2019?

Accepted Answer

A)  $5 250 
B)  $10 500 
C)  $13 500 
D)  None of the above 
A)  $5 250 
B)  $10 500 
C)  $13 500 
D)  None of the above

Question 10

When a company discards machinery that is fully depreciated, this transaction will be recorded with which of the following entries?

Accepted Answer

A)  DR Accumulated depreciation
CR Machinery 
B)  DR Machinery
CR Accumulated depreciation 
C)  DR Cash
CR Accumulated depreciation 
D)  DR Depreciation expense
CR Accumulated depreciation 
A)  DR Accumulated depreciation
CR Machinery 
B)  DR Machinery
CR Accumulated depreciation 
C)  DR Cash
CR Accumulated depreciation 
D)  DR Depreciation expense
CR Accumulated depreciation

Question 11

On 1 January 2018, 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 accumulated depreciation at 31 December 2020?

Accepted Answer

A)  $21 000 
B)  $31 500 
C)  $42 000 
D)  None of the above 
A)  $21 000 
B)  $31 500 
C)  $42 000 
D)  None of the above

Question 12

Where there is an asset revaluation decrement that does not reverse a previous increment, the amount is debited to:

Accepted Answer

A)  an expense account. 
B)  retained profits. 
C)  revaluation surplus. 
D)  share capital. 
A)  an expense account. 
B)  retained profits. 
C)  revaluation surplus. 
D)  share capital.

Question 13

Bully Ltd acquires all the business assets and liabilities of Small Ltd for $800 000 cash. The best estimates of the fair market values of the assets and liabilities are:   What is the value of goodwill acquired by Bully Ltd?

Accepted Answer

A)  $210 000 
B)  $300 000 
C)  $600 000 
D)  None of the above 
A)  $210 000 
B)  $300 000 
C)  $600 000 
D)  None of the above

Question 14

A used machine with a purchase price of $85 000, requiring an overhaul costing $8 000, installation costs of $4 000 and testing costs of $2 000, would have a cost basis of:

Accepted Answer

A)  $85 000. 
B)  $93 000. 
C)  $97 000. 
D)  $99 000. 
A)  $85 000. 
B)  $93 000. 
C)  $97 000. 
D)  $99 000.

Question 15

A company purchases equipment on 1 January 2019. The following costs are incurred:   The equipment has an estimated life of five years and no salvage value. What is the depreciation expense in 2019 if the straight-line method is used?

Accepted Answer

A)  $28 000 
B)  $36 000 
C)  $40 000 
D)  None of the above 
A)  $28 000 
B)  $36 000 
C)  $40 000 
D)  None of the above

Question 16

Which of the following should NOT be included in the cost of a new machine?

Accepted Answer

A)  Delivery of machine to factory 
B)  Repair costs for existing equipment 
C)  Cost of testing machine 
D)  Installation costs 
A)  Delivery of machine to factory 
B)  Repair costs for existing equipment 
C)  Cost of testing machine 
D)  Installation costs

Question 17

The purpose of depreciation is to:

Accepted Answer

A)  allocate cost in order to measure profit. 
B)  track value changes in the assets. 
C)  measure the current value of assets in the balance sheet. 
D)  record the fair value of the asset. 
A)  allocate cost in order to measure profit. 
B)  track value changes in the assets. 
C)  measure the current value of assets in the balance sheet. 
D)  record the fair value of the asset.

Question 18

Which method can result in annual depreciation expense going up and down from period to period?

Accepted Answer

A)  Reducing balance 
B)  Units of production 
C)  Straight line 
D)  None of the above 
A)  Reducing balance 
B)  Units of production 
C)  Straight line 
D)  None of the above

Question 19

Equipment with a cost of $15 000 and accumulated depreciation of $12 500 was sold for $1 700. The journal entry to record the disposal would include:

Accepted Answer

A)  CR Cash, $1 700. 
B)  CR Loss on sale, $800. 
C)  DR Accumulated depreciation, $12 500. 
D)  CR Equity, $15 000. 
A)  CR Cash, $1 700. 
B)  CR Loss on sale, $800. 
C)  DR Accumulated depreciation, $12 500. 
D)  CR Equity, $15 000.

Question 20

Which of the following would be included in property, plant and equipment?

Accepted Answer

A)  i and ii only 
B)  i, ii and iii only 
C)  i, ii and iv only 
D)  i, ii, iii and iv 
A)  i and ii only 
B)  i, ii and iii only 
C)  i, ii and iv only 
D)  i, ii, iii and iv

Where there is an asset revaluation increment that does not reverse a previous decrement, the amount of the increment is credited to:

Equipment with a cost of $160 000 has an estimated residual value of $10 000 and an estimated useful life of four years. The equipment is to be depreciated by the reducing balance method (at twice the straight-line rate). What is the amount of depreciation for the first full year?

A machine purchased on 1 July 2019 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 2021, what would its net book value be?

Equipment with a cost of $160 000 has an estimated residual value of $10 000 and an estimated useful life of four years. Using the straight-line method, what is the amount of depreciation for the first full year?

When the accumulated depreciation is deducted from the long-term asset account, the figure is known as the:

Brown Ltd purchased a machine on the first day of the financial period, 1 July 2018, 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 2019. If the machine was sold for $60 000, what was the gain or loss on disposal?

When a company discards machinery that is fully depreciated, this transaction will be recorded with which of the following entries?

On 1 January 2018, 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 accumulated depreciation at 31 December 2020?

Where there is an asset revaluation decrement that does not reverse a previous increment, the amount is debited to:

Bully Ltd acquires all the business assets and liabilities of Small Ltd for $800 000 cash. The best estimates of the fair market values of the assets and liabilities are: What is the value of goodwill acquired by Bully Ltd?

A used machine with a purchase price of $85 000, requiring an overhaul costing $8 000, installation costs of $4 000 and testing costs of $2 000, would have a cost basis of:

A company purchases equipment on 1 January 2019. The following costs are incurred: The equipment has an estimated life of five years and no salvage value. What is the depreciation expense in 2019 if the straight-line method is used?

Which of the following should NOT be included in the cost of a new machine?

The purpose of depreciation is to:

Which method can result in annual depreciation expense going up and down from period to period?

Equipment with a cost of $15 000 and accumulated depreciation of $12 500 was sold for $1 700. The journal entry to record the disposal would include:

Which of the following would be included in property, plant and equipment?

Introduction to Financial Accounting

Measuring and Evaluating Financial Position and Financial Performance

The Double-Entry System

Record-Keeping

Accrual Accounting Adjustments

Financial Reporting Principles, Accounting Standards and Auditing

Internal Control and Cash

Accounts Receivable and Further Record-Keeping

Inventory

Liabilities

Investments and Shareholders Equity

Revenue and Expense Recognition: Additional Concepts

The Statement of Cash Flows

Financial Statement Analysis

Accounting Policy Choices

Sustainability Reporting

Filters

Exam 10: Noncurrent Assets

Where there is an asset revaluation increment that does not reverse a previous decrement, the amount of the increment is credited to:

Equipment with a cost of $160 000 has an estimated residual value of $10 000 and an estimated useful life of four years. The equipment is to be depreciated by the reducing balance method (at twice the straight-line rate). What is the amount of depreciation for the first full year?

A machine purchased on 1 July 2019 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 2021, what would its net book value be?

Equipment with a cost of $160 000 has an estimated residual value of $10 000 and an estimated useful life of four years. Using the straight-line method, what is the amount of depreciation for the first full year?

When the accumulated depreciation is deducted from the long-term asset account, the figure is known as the:

Brown Ltd purchased a machine on the first day of the financial period, 1 July 2018, 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 2019. If the machine was sold for $60 000, what was the gain or loss on disposal?

When a company discards machinery that is fully depreciated, this transaction will be recorded with which of the following entries?

On 1 January 2018, 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 accumulated depreciation at 31 December 2020?

Where there is an asset revaluation decrement that does not reverse a previous increment, the amount is debited to:

Bully Ltd acquires all the business assets and liabilities of Small Ltd for $800 000 cash. The best estimates of the fair market values of the assets and liabilities are: What is the value of goodwill acquired by Bully Ltd?

A used machine with a purchase price of $85 000, requiring an overhaul costing $8 000, installation costs of $4 000 and testing costs of $2 000, would have a cost basis of:

A company purchases equipment on 1 January 2019. The following costs are incurred: The equipment has an estimated life of five years and no salvage value. What is the depreciation expense in 2019 if the straight-line method is used?

Which of the following should NOT be included in the cost of a new machine?

The purpose of depreciation is to:

Which method can result in annual depreciation expense going up and down from period to period?

Equipment with a cost of $15 000 and accumulated depreciation of $12 500 was sold for $1 700. The journal entry to record the disposal would include:

Which of the following would be included in property, plant and equipment?

Introduction to Financial Accounting

Measuring and Evaluating Financial Position and Financial Performance

The Double-Entry System

Record-Keeping

Accrual Accounting Adjustments

Financial Reporting Principles, Accounting Standards and Auditing

Internal Control and Cash

Accounts Receivable and Further Record-Keeping

Inventory

Liabilities

Investments and Shareholders Equity

Revenue and Expense Recognition: Additional Concepts

The Statement of Cash Flows

Financial Statement Analysis

Accounting Policy Choices

Sustainability Reporting

Filters