Exam 20: Non-Current Assets: Acquisition and Depreciation

NG Ltd purchased a sprinkler system on 1 January,the start of Year 1. Cost (net of GST) \ 6500 Residual \ 1500 Estimated Useful Life 5 years Under the straight-line method depreciation expense for year 2 will be:

The information to be disclosed about office equipment in the financial statements prepared for external reporting includes how many of the following? .The total number of assets held in the office equipment grouping .Aggregate cost of office equipment .Aggregate Accumulated Depreciation of office equipment .Depreciation rates used or useful lives of office equipment .Depreciation method used

A machine was purchased on 3 January 2012 for $48 000,net of GST.The machine had an estimated residual value of $6000 and an estimated useful life of 5 years.Depreciation expense for the year ended 31 December 2012,using sum-of-the-years'-digits method,is:

An asset bought for $168 000 with a zero residual value was expected to last for seven years before it needed replacing.If at the end of the third year it was decided to extend its total useful life by four years new remaining life is now eight years)calculate the new depreciation charge using the straight-line approach.

The depreciation method most commonly used in Australia,as disclosed by a survey of the annual reports of listed companies,is:

The cost of an asset less its residual value is known as its d__________________ amount.

Detailed property records constitute a s______________ ledger to the property account in the general ledger.

Under IAS 23/AASB 123,if borrowing costs are directly attributable to the acquisition or construction of an asset that takes a considerable period of time to produce,the standard allows the alternative of treating the borrowing costs as part of the c_________ of acquisition of the qualifying asset.

The statement concerning the diminishing-balance method of depreciation that is true is:

The factor that distinguishes fixed assets such as property,plant and equipment from other assets is:

In the financial statements prepared at the end of the accounting period the item Accumulated Depreciation appears:

How many of these are advantages of maintaining a subsidiary ledger for depreciable assets? .It provides information for the preparation of income tax returns .It provides information to support insurance claims in the event of loss from theft or accident .It provides information concerning servicing of the assets .It provides information for internal control over assets

The Delivery Equipment account in the ledger of A Co has a balance of $17 600 which is the cost of two 2^nd hand trucks purchased on 1 January 2011.The Accumulated Depreciation Delivery Equipment account has a balance on 31 December 2012 of $8000,before adjusting entries.No additional delivery trucks have been acquired or sold.The residual value of each truck is estimated to be $800 and the straight-line depreciation method is used.The necessary adjusting entry to record annual depreciation on 31 December 2013 is: $\quad\quad\text { Debit } \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad \text { Credit }$ a. $\text { Depreciation Exp } \quad\quad \$ 8000 \quad\text { Delivery Equipment } \quad \$ 8000$ b. $\text { Accumulated Deprecn } \$ 4000\quad \text { Delivery Equipment } \quad \$ 4000$ c. $\text { Depreciation Exp } \quad\quad \$ 8000\quad \text { Cash at Bank } \quad\quad\quad\quad \$ 8000$ d. $\text { Depreciation Exp } \quad\quad \$ 4000\quad \text { Accumulated Deprecn } \quad \$ 4000$

HRH 's balance sheet of 30 June 2011 shows a motor vehicle at a cost price of $72000 less accumulated depreciation of $36 000.Depreciation is calculated on a straight-line basis.If the vehicle had a useful life of 6 years at the time of purchase and a residual value of $6000 what is its carrying amount on 1 July 2013?

When a second-hand building is purchased which of these should not be debited to the building account but charged to a separate asset account?

IAS 16/AASB 116 requires all assets must be accounted for on acquisition at:

The Egypt Corporation purchased a machine for $40 000 on 1 January 2012 which is expected to have a 5 year life,no residual value,and to produce a total of 20 000 ridgets before it is scrapped.Assuming the Egypt Corporation uses the units-of-production method and actual production up to 31 December 2012,the end of the accounting year)is 5 000 ridgets,calculate depreciation expense for 2012.

The correct statement concerning subsequent costs incurred in relation to a depreciable asset after its original acquisition is:

The installation of escalators to replace stairwells is an example of capital/maintenance)_______________ expenditure.

The statement that describes the assumption underlying the straight-line method of depreciation is: