Exam 20: Non-Current Assets: Acquisition and Depreciation

When detailed subsidiary records are maintained for delivery equipment the general ledger accounts,Accumulated Depreciation Delivery Equipment and Delivery Equipment,are c_____________ accounts.

If the cost of a major service on a motor vehicle,which did not increased the vehicles' useful life was incorrectly capitalised and added to the carrying amount of the vehicle rather than being expensed:

The s_____________ line method of depreciation is the most widely used.

When estimates of useful life and residual value made for the purposes of calculating depreciation,in later years turn out to be materially incorrect and the asset has not reached the end of its useful life,the procedure to be followed is to:

Kamp Gravel Co purchased three trucks for $50 000 each plus GST by making a $20 000 down payment and agreeing to pay the balance at the end six months.The journal entry to record the acquisition is: a. Trucks $\quad$$\quad$ 150,000 $\quad$ GST Outlays $\quad$$\quad$ 15,000 $\quad$ Sundry creditor $\quad$$\quad$ 165,000 b. Trucks $\quad$$\quad$ 150,000 $\quad$ vi.GST Outlays $\quad$$\quad$ 15,000 $\quad$ Cash $\quad$$\quad$ 20,000 $\quad$ Sundry creditor $\quad$$\quad$ 145,000 c. Cash $\quad$$\quad$ 20,000 $\quad$ Sundry creditor $\quad$$\quad$ 130,000 $\quad$ Trucks $\quad$$\quad$ 150,000 d. Trucks $\quad$$\quad$ 20,000 $\quad$ Cash $\quad$$\quad$ 20,000

On 31 December 2011 a new motor vehicle with a life of five years and no estimated residual value was purchased by a business at a cost of $23 000,net of GST.The diminishing-balance depreciation method is employed.At a rate of 25% p.a.what is the carrying value of the motor vehicle at 31 December 2013 after charging depreciation for that year?

Wong purchased a computer for $15 000,net of GST.Originally it had an estimated useful life of 4 years and a residual value of $3000.The straight-line method is used.At the start of the third year of usage Wong revised the life of the computer to a total life of 6 years.The residual value had not changed.What depreciation expense should be recorded for the computer for year 3?

The statement relating to depreciation that is true is:

How many of these are ways in which a residual value can be recovered from an asset on its disposal? ? Trade in ? Sell second-hand ? Sell for scrap

When examining an external financial report a ratio that can be useful in determining the approximate age of the assets is:

Sentosa has acquired manufacturing equipment and incurred these expenses in doing so. \ ii. Gross invoice price, net of GST, subject to terms of 2/10,/30) 9000 iii. Transportation costs to get equipment to factory 1000 iv. Special permit to allow wide load on freeway 300 v. Speeding ticket incurred by comp any driver while deliv ering equipment to the factory 100 vi. Cost to repair wall damaged during installation 500 The equipment should be recorded in Sentosa's records at:

On what basis would the costs of several items of property,plant and equipment,acquired for a lump-sum payment,normally be allocated?

A retailer purchased a delivery wagon for $21 000 on 1 July 2010.It was planned to keep the vehicle until it had done 60 000 kilometres and then to trade it in.The expected trade in value was $6 000. Schedule of actual distance travelled was: 30/6/11 20000 30/6/12 15000 30/6/13 15000 30/6/14 10000 Using the units-of-production method the amount of depreciation charged for the year ended 30 June 2014 was:

Which of the following not is an advantage of the use of accelerated depreciation methods for tax purposes as opposed to the straight-line method?

PSU Enterprises purchased a small timber company for $200 000 net of GST .The fair values of the individual assets acquired net of GST were: \ \ Building 80,000 Standing timber 120,000 Land 20,000 Equipment 30,000 At what amount should standing timber be recorded by PSU?

If the straight-line method of depreciation rather than the reducing-balance method is selected,in the early years of the asset's life the depreciation charge will be comparatively:

The statement that best describes the nature of accounting depreciation is:

How many of these factors will have an effect on the amount of depreciation charged on an asset in a particular accounting period? .Estimated useful life of asset .Cost or revalued amount of asset .Estimated residual value of asset .Method of depreciation used

Eastern Rug Distributors acquired a computer for $ 7000 on 31 December 2010.Calculate depreciation for the year ended 31 December 2012 using the diminishing-balance method at 20% p.a.Assume a nil residual value.

On 1 January 2012 Dee Ltd acquired electronic equipment for $10 000,net of GST.It is estimated it will have no residual value.If depreciation is provided at 10% p.a.on the diminishing-balance basis,the depreciation charge for the year ended 31 December 2014 is: