Exam 20: Non-Current Assets: Acquisition and Depreciation

A decline in the ratio net sales/average property, plant and equipment over time could mean:

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:

Melbourne Manufacturing purchased a machine for $60 000 on 1 January 2015 which is expected to have a 5 year life, no residual value, and to produce a total of 20 000 wingdings before it is scrapped. Assuming the Melbourne Manufacturing uses the units- of-production method and actual production up to 31 December 2015, (the end of the accounting year) is 5000 wingdings, calculate depreciation expense for 2015.

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 which of the following? $ $

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

The correct entry to record the purchase of a motor vehicle for $25 000 cash, plus 10% GST is which of the following?

Ryan Co purchased a computer for $15 000. Originally it had an estimated useful life of 4 years and a residual value of $3000, but on the first day of the 4th year of life the estimated useful life was extended by a further two years and the residual value was reduced to zero. Ryan Co uses the straight-line method to depreciate its computer equipment. At the end of year 4, how much depreciation should be recorded for the computer?

The historical cost of an asset less its residual (scrap) value is called:

The equipment should be recorded in Blue Horizon's records at:

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?

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

Which of these is not an example of a fixed asset for a company engaged in mining coal?

A popular method for an entity to acquire the benefits of property, plant and equipment is to lease assets. How many of these asset types are commonly subject to lease agreements? Motor vehicles Land and buildings Machinery Storage space

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 Gift the asset to charity Sell for scrap

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

An asset bought for $147 000 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.

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?

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, expenses would be: