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Business
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Financial Accounting Reporting Analysis
Exam 8: Reporting and Analysing Non-Current Assets
Path 4
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Question 1
Multiple Choice
Indicate whether each of the following expenditures should be classified as: -Driveway cost
Question 2
Multiple Choice
For each item listed, choose a code letter to indicate the allocation terminology for the item. Use the following codes for your answer: -Trademarks
Question 3
Multiple Choice
Select of Section of the statement of financial position where the following items are reported. Use the following code to identify your answer: -Buildings
Question 4
Multiple Choice
Indicate whether each of the following expenditures should be classified as: -Cost of trial runs for machinery
Question 5
Short Answer
The Hang-Out, a popular pizza hang-out, has a thriving delivery business. The Hang-Out has a fleet of three delivery vehicles and they use the units of production (kilometre) method of depreciation. Prior to making the entry for this year's depreciation expense, the asset register for the fleet is as follows:
Required: (a) Determine the depreciation rates per kilometre for each car. (b) Determine the depreciation expense for each car for the current year. (c) Make one compound journal entry to record the annual depreciation expense for the fleet.
Question 6
Short Answer
Prepare the journal entries to record the following transactions for the Nobles Company, which has a financial year end of 31 December and uses the straight-line method of depreciation. (a) On 30 September, 2019, the company sold old delivery equipment for $9,000. The delivery equipment was purchased on 1 January, 2017, for $21,000 and was estimated to have a $3,000 residual value at the end of its 5-year life. Depreciation on the delivery equipment has been recorded through 31 December, 2018. (b) On 30 June, 2019, the company sold old office equipment for $18,000. The office equipment originally cost $24,000 and had accumulated depreciation to the date of disposal of $10,000.
Question 7
Multiple Choice
Match the descriptions with their terms: -Expected cash value of the asset at the end of its useful life.
Question 8
Multiple Choice
Which of the following statements regarding accounting for the acquisition of property, plant and equipment is incorrect?
Question 9
Short Answer
The Donovan Medical Centre purchased a new surgical laser for $64,000. The estimated residual value is $4,000. The laser has a useful life of six years and the clinic expects to use it 10,000 hours. It was used 1,600 hours in year 1; 2,100 hours in year 2; 2,400 hours in year 3; 1,400 hours in year 4; 2,000 hours in year 5; 500 hours in year 6. Instructions: (a) Calculate the annual depreciation for each of the six years under each of the following methods: (1) straight-line (2) units-of-production (service). (b) If you were the administrator of the clinic, which method would you select as the most appropriate? Justify your answer. (c) Which method would result in the lowest reported profit in the first year? Which method would result in the lowest total reported profit over the six-year period?
Question 10
Multiple Choice
For each item listed, choose a code letter to indicate the allocation terminology for the item. Use the following codes for your answer: -Patents
Question 11
Multiple Choice
Warners Warehouse installs a new parking lot. The paving cost $45,000 and the lights to illuminate the new parking area cost $15,000. Which of the following statements is true with respect to these additions?