Question 1

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

Question 2

Use the information below to answer the following questions:
Creep Ltd purchased a machine for $100 000 on 1 January 2010. It has an estimated useful life of 5 years. Creep Ltd’s financial period ends on 31 December. The machine was depreciated using the reducing balance method at 60%.
-What was the balance of accumulated depreciation at 31 December 2012?

Accepted Answer

A)  $84 000 
B)  $93 600 
C)  $97 440 
D)  $60 000. 
A)  $84 000 
B)  $93 600 
C)  $97 440 
D)  $60 000. B

Question 3

Use the information below to answer the following questions.
Norman Ltd purchased a motor vehicle for $45,000 on 1 July 2009. The vehicle was expected to have a 4-year life and a $13,000 trade-in value, and was expected to be driven for 160,000 km. The financial period ends on 30 June.
-Assuming Norman Ltd used the straight-line method of depreciation,the net book value at 30 June 2012 was:

Accepted Answer

A)  $8000 
B)  $11 250 
C)  $21 000 
D)  $29 000. 
A)  $8000 
B)  $11 250 
C)  $21 000 
D)  $29 000. C

Question 4

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 to existing equipment 
C)  cost of testing machine 
D)  installation costs. 
A)  delivery of machine to factory 
B)  repair costs to existing equipment 
C)  cost of testing machine 
D)  installation costs.

Question 5

X buys Y for $1 million.The fair value of the following items is: property,plant and equipment $800 000; accounts receivable $160 000; loan from the bank $60 000; and provision for employee entitlements $80 000.The value of goodwill is:

Accepted Answer

A)  $40 000 
B)  $10 000 
C)  $180 000 
D)  $820 000. 
A)  $40 000 
B)  $10 000 
C)  $180 000 
D)  $820 000.

Question 6

Use the information below to answer the following questions.
Alby Ltd purchased a machine for $32,000 on 1 January 2010. The machine was expected to have a useful life of 4 years. The financial year ends on 31 December. The straight-line method of depreciation is employed.
-What was the depreciation expense for year ended 31 December 2010?

Accepted Answer

A)  $10 500 
B)  $9250 
C)  $8500 
D)  $8000. 
A)  $10 500 
B)  $9250 
C)  $8500 
D)  $8000.

Question 7

Which of the following do NOT need to be disclosed in financial statements?

Accepted Answer

A)  details concerning revaluations 
B)  cost and accumulated depreciation by major classes of assets 
C)  a description of the enterprise's accounting policies with respect to depreciation/amortisation 
D)  reasons for assets not being revalued. 
A)  details concerning revaluations 
B)  cost and accumulated depreciation by major classes of assets 
C)  a description of the enterprise's accounting policies with respect to depreciation/amortisation 
D)  reasons for assets not being revalued.

Question 8

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 9

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

Question 10

Equipment that cost $500 000 and had accumulated depreciation of $300 000,was sold for $180 000.This results in a:

Accepted Answer

A)  $320 000 loss 
B)  $20 000 loss 
C)  $180 000 gain 
D)  $20 000 gain. 
A)  $320 000 loss 
B)  $20 000 loss 
C)  $180 000 gain 
D)  $20 000 gain.

Question 11

Use the information below to answer the following questions:
On 1 January 2010, a new motor vehicle with a useful life of 4 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 2011?

Accepted Answer

A)  $5250 
B)  $10 500 
C)  $13 500 
D)  $21 000. 
A)  $5250 
B)  $10 500 
C)  $13 500 
D)  $21 000.

Question 12

Use the information below to answer the following questions.
Norman Ltd purchased a motor vehicle for $45,000 on 1 July 2009. The vehicle was expected to have a 4-year life and a $13,000 trade-in value, and was expected to be driven for 160,000 km. The financial period ends on 30 June.
-Assuming Norman Ltd used the reducing balance method of depreciation and a rate of 40%,the net book value at 30 June 2012 was:

Accepted Answer

A)  $9720 
B)  $16 200 
C)  $35 280 
D)  none of the above. 
A)  $9720 
B)  $16 200 
C)  $35 280 
D)  none of the above.

Question 13

Alby Ltd sold the machine on 1 January 2012 for $14 000.What was the gain or loss on sale?

Accepted Answer

A)  gain $14 000 
B)  gain $6000 
C)  loss $6000 
D)  loss $14 000. 
A)  gain $14 000 
B)  gain $6000 
C)  loss $6000 
D)  loss $14 000.

Question 14

Use the information below to answer the following questions.
Brown Ltd purchased a machine on the first day of the financial period, 1 July 2010, for $100,000. The machine was depreciated using the reducing balance method and a rate of 20%. It was sold on 1 July 2011.
-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 15

Which of the following statements regarding leased assets is incorrect?

Accepted Answer

A)  Accrual accounting recognises the economic value of the asset. 
B)  Lease assets are amortised. 
C)  The principal portion is deducted from the lease and the interest is an expense. 
D)  The cost of the lease asset is not recorded in the balance sheet. 
A)  Accrual accounting recognises the economic value of the asset. 
B)  Lease assets are amortised. 
C)  The principal portion is deducted from the lease and the interest is an expense. 
D)  The cost of the lease asset is not recorded in the balance sheet.

Question 16

Use the information below to answer the following questions.
Speedy Ltd purchased a delivery truck on 1 July 2010 for $450 000. It had an estimated salvage value of $150 000. The estimated number of kilometers to be driven was 150 000. 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 2010, 25 000 km; during 12 months to 31 December 2011, 75 000 km; and during 12 months to 31 December 2012, 40 000 km.
-What was the depreciation expense for the year ended 31 December 2010?

Accepted Answer

A)  $50 000 
B)  $80 000 
C)  $150 000 
D)  $225 000. 
A)  $50 000 
B)  $80 000 
C)  $150 000 
D)  $225 000.

Question 17

A building with a cost of $500 000,an estimated residual value of $50 000,and an estimated useful life of 20 years was depreciated by the straight-line method for 10 years.In the eleventh year,it was determined that the useful life should be extended by 10 years (i.e.from 20 years to 30 years).The residual value was to remain the same.The depreciation expense for the current and future years is:

Accepted Answer

A)  $15 000 
B)  $11 250 
C)  $13 750 
D)  $12 500. 
A)  $15 000 
B)  $11 250 
C)  $13 750 
D)  $12 500.

Question 18

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

Accepted Answer

A)  market value 
B)  replacement value 
C)  net book value 
D)  realisable value. 
A)  market value 
B)  replacement value 
C)  net book value 
D)  realisable value.

Question 19

Use the information below to answer the following questions.
Delta Ltd purchased a motor vehicle for $45,000 on 1 January 2011. The vehicle was expected to have a life of 3 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 depreciation expense for year ended 30 June 2011?

Accepted Answer

A)  $15 000 
B)  $10 000 
C)  $7500 
D)  $5000. 
A)  $15 000 
B)  $10 000 
C)  $7500 
D)  $5000.

Question 20

Use the information below to answer the following questions:
On 1 January 2010, a new motor vehicle with a useful life of 4 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 2012?

Accepted Answer

A)  $42 000 
B)  $22 500 
C)  $12 500 
D)  $43 500. 
A)  $42 000 
B)  $22 500 
C)  $12 500 
D)  $43 500.

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?

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

X buys Y for $1 million.The fair value of the following items is: property,plant and equipment $800 000; accounts receivable $160 000; loan from the bank $60 000; and provision for employee entitlements $80 000.The value of goodwill is:

Which of the following do NOT need to be disclosed in financial statements?

Using the straight-line method,what is the amount of depreciation for the first full year?

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

Equipment that cost $500 000 and had accumulated depreciation of $300 000,was sold for $180 000.This results in a:

Alby Ltd sold the machine on 1 January 2012 for $14 000.What was the gain or loss on sale?

Which of the following statements regarding leased assets is incorrect?

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

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

Sustainability Reporting

Internal Control and Cash

Inventory

Liabilities

Completing the Balance Sheet

Revenue and Expense Recognition: Additional Concepts

The Statement of Cash Flows

Financial Statement Analysis

Accounting Policy Choices

Appendix: Special Journals, subsidiary Ledgers and Control Accounts

Filters

Exam 10: Noncurrent Assets

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?

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

X buys Y for $1 million.The fair value of the following items is: property,plant and equipment $800 000; accounts receivable $160 000; loan from the bank $60 000; and provision for employee entitlements $80 000.The value of goodwill is:

Which of the following do NOT need to be disclosed in financial statements?

Using the straight-line method,what is the amount of depreciation for the first full year?

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

Equipment that cost $500 000 and had accumulated depreciation of $300 000,was sold for $180 000.This results in a:

Alby Ltd sold the machine on 1 January 2012 for $14 000.What was the gain or loss on sale?

Which of the following statements regarding leased assets is incorrect?

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

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

Sustainability Reporting

Internal Control and Cash

Inventory

Liabilities

Completing the Balance Sheet

Revenue and Expense Recognition: Additional Concepts

The Statement of Cash Flows

Financial Statement Analysis

Accounting Policy Choices

Appendix: Special Journals, subsidiary Ledgers and Control Accounts

Filters