TEORIA DE LAS E.D.O
4.2. DIMENSI ´ ON DEL ESPACIO VECTO- VECTO-RIAL SOLUCI ´ ON DE UNA E.D.O
Non-current Assets (Tangible)
CHAPTER
CHAPTER
99
Chapter 9 title and content Chapter 9 title and content
Non-current Assets
Non-current Assets
(Tangible)
(Tangible)
CHAPTER
CHAPTER
99
Non-current Assets (Tangible)
Non-current Assets (Tangible)
CHAPTER
CHAPTER
99
1
1
Black Stone Ltd bought two buildings. Building A for 250,000 and Building B for 120,
Black Stone Ltd bought two buildings. Building A for 250,000 and Building B for 120, 000. Building A is000. Building A is expected to last for 10 years where building B is expected to be useful for five years. Calculate per year expected to last for 10 years where building B is expected to be useful for five years. Calculate per year depreciation for both
depreciation for both buildings.buildings.
2
2
Alert Book Plc has
Alert Book Plc has several assets including a plant. Company uses reducing balance method toseveral assets including a plant. Company uses reducing balance method to depreciate the plant at the rate of 20%. The cost of the plant at
depreciate the plant at the rate of 20%. The cost of the plant at the time of acquisition was 240,000.the time of acquisition was 240,000. What is the depreciation for the
What is the depreciation for the first three years?first three years?
3
3
BlackSoldiers make computer games. Recently they bought a mini-frame computer to
BlackSoldiers make computer games. Recently they bought a mini-frame computer to run the simulationrun the simulation process needed to analyze artificial intelligence (A.I.) system performance in game against human
process needed to analyze artificial intelligence (A.I.) system performance in game against human reactions. It cost 2 million and they are expecting that it will be in use for next 4 years w
reactions. It cost 2 million and they are expecting that it will be in use for next 4 years w here its disposalhere its disposal value at that time will be only 250,000.
value at that time will be only 250,000. What is the depreciation of the
What is the depreciation of the equipment at the end of equipment at the end of third year?third year?
4
4
A sole trader bought some office equipments two years back for 50,000 with an expected scrap value of A sole trader bought some office equipments two years back for 50,000 with an expected scrap value of 2,500. Equipment is depreciated using reducing balance method at 30%.
2,500. Equipment is depreciated using reducing balance method at 30%. What is the depreciationWhat is the depreciation charge at the end of third year of its
charge at the end of third year of its use?use?
5
5
A company has three motor vehicles where each vehicle was expected to last 5 years at the time of A company has three motor vehicles where each vehicle was expected to last 5 years at the time of acquisition. The details about the year they acquired and t
acquisition. The details about the year they acquired and the cost are as he cost are as follows:follows: 1.
1. Toyota: bought 1 January 2008 for 6,000Toyota: bought 1 January 2008 for 6,000 2.
2. Nissan: bought 30 June 2009 for 7,300Nissan: bought 30 June 2009 for 7,300 3.
3. Honda: bought 15 October 2010 for 4,300Honda: bought 15 October 2010 for 4,300 If the scrap value of
If the scrap value of the assets is nil the assets is nil then calculate the depreciation charge for the year ended 31then calculate the depreciation charge for the year ended 31 December 2012 under:
December 2012 under:
Straight line methodStraight line method
Reducing balance methodReducing balance method
Remember company has the policy of charging
Remember company has the policy of charging full depreciation on the assets available at the full depreciation on the assets available at the end ofend of year.
Non-current Assets (Tangible)
Non-current Assets (Tangible)
CHAPTER
CHAPTER
99
6
6
A company bought office equipment worth 500,000.
A company bought office equipment worth 500,000. If the equipment is depreciated at the rate If the equipment is depreciated at the rate of 15%of 15% then prepare accumulated depreciation account for the first five years
then prepare accumulated depreciation account for the first five years under:under:
Straight line methodStraight line method
Diminishing balance methodDiminishing balance method 7
7
An accountant of Rubber Monkeys Ltd
An accountant of Rubber Monkeys Ltd is preparing quarter ended financial records. He is gis preparing quarter ended financial records. He is given theiven the following information from the previous quarter.
following information from the previous quarter. 31 March 2011
31 March 2011 Machinery a/c balance: 160,000Machinery a/c balance: 160,000 31 March 2011
31 March 2011 Accumulated DepreciatiAccumulated Depreciationon – – Machinery a/c balance: 45,000 Machinery a/c balance: 45,000
During the quarter company bought new machinery costing 74,000 with a residual value of 5,500. During the quarter company bought new machinery costing 74,000 with a residual value of 5,500. If the company is depreciating machinery assets on monthly
If the company is depreciating machinery assets on monthly basis using diminishing balance method atbasis using diminishing balance method at the rate of
the rate of
20%20%
then prepare the following for three months of quarter ended 30 June 2011.then prepare the following for three months of quarter ended 30 June 2011.
Machinery accountMachinery account
Accumulated Depreciation accountAccumulated Depreciation account 8
8
Fun n Joy Ltd is dong event management business. At the start of the year they had the following assets: Fun n Joy Ltd is dong event management business. At the start of the year they had the following assets: Audio
Audio Equipments Equipments 255,500255,500 Vehicle 125,000 Vehicle 125,000 Furniture 330,000 Furniture 330,000 During the year company made the
During the year company made the following acquisitions:following acquisitions:
March 15, 2011 - Two DSLR cameras so that March 15, 2011 - Two DSLR cameras so that facilities of event coverage can also be providefacilities of event coverage can also be providedd
which cost the company 50,000. which cost the company 50,000.
October 20, 2011 - Company also bought two vehicles to October 20, 2011 - Company also bought two vehicles to cater the increasing demand wherecater the increasing demand where
each vehicle worth 15,000. Registration fee of both cars amounted to 2,500. It is also obligatory each vehicle worth 15,000. Registration fee of both cars amounted to 2,500. It is also obligatory for the companies to have their
for the companies to have their vehicles insured before they can be used under local laws.vehicles insured before they can be used under local laws. Insurance cost amounted to 1,500.
Insurance cost amounted to 1,500.
Chief accountant has issued the instructions that these newly bought
Chief accountant has issued the instructions that these newly bought cameras will be categorized undercameras will be categorized under “Equipments” category in financial statements.
“Equipments” category in financial statements.
Company records depreciation on monthly basis as follows: Company records depreciation on monthly basis as follows:
Non-current Assets (Tangible)
Non-current Assets (Tangible)
CHAPTER
CHAPTER
99
Vehicle 25% at reducing balance methodVehicle 25% at reducing balance method
Furniture at 15% straight Furniture at 15% straight line basis.line basis.
Prepare the following for the year ended 31 December 2011: Prepare the following for the year ended 31 December 2011:
1.
1. Accounts of each asset Accounts of each asset separately including accumulated depreciation account for each assetseparately including accumulated depreciation account for each asset 2.
2. Extracts from Income statement and Statement of Extracts from Income statement and Statement of financial positionfinancial position
9
9
At the start of the financial year 2011,
At the start of the financial year 2011, the building account had a balance of 43,000 and accumulatedthe building account had a balance of 43,000 and accumulated depreciation account had 26,600.
depreciation account had 26,600.
During the year company purchased a building for 35,000 on 13 September 2011. In connection to this During the year company purchased a building for 35,000 on 13 September 2011. In connection to this new building company has incurred following cost:
new building company has incurred following cost: 1.
1. Legal Legal fee fee 2,0002,000 2.
2. Paint Paint 800800 3.
3. Wiring Wiring 2,6002,600 4.
4. Electricity Electricity cost cost in in wiring wiring process process 550550 5.
5. Labour Labour cost cost of of wiring wiring 13001300
Company also carried out some repair work on existing building which is as follows: Company also carried out some repair work on existing building which is as follows:
1.
1. Painting Painting 300300 2.
2. 2 2 additional additional rooms rooms 42004200
Further information revealed that labour employed for wiring
Further information revealed that labour employed for wiring purposes on new machinery waspurposes on new machinery was company’s own staff. Amount paid to labour for appreciation of good work was 150 wh
company’s own staff. Amount paid to labour for appreciation of good work was 150 which is included inich is included in 1300. Besides this amount nothing has been paid in addition to their normal wages.
1300. Besides this amount nothing has been paid in addition to their normal wages. Company depreciates the asset on reducing balance method at the
Company depreciates the asset on reducing balance method at the rate of 20%. In rate of 20%. In case a new asset case a new asset isis purchased during the year then depreciation is calculated on t
purchased during the year then depreciation is calculated on the basis of months used during the he basis of months used during the yearyear starting from the first day of the month subsequent to the month of purchase.
starting from the first day of the month subsequent to the month of purchase. Prepare:
Prepare: 1.
1. Building accountBuilding account 2.
2. Accumulated Depreciation accountAccumulated Depreciation account – – Building Building 3.
3. Extracts from income StatementExtracts from income Statement 4.
4. Extracts from Statement of Financial PositionExtracts from Statement of Financial Position
10
10
A company is using two assets for three years which were bought for 100,000 each. At t
A company is using two assets for three years which were bought for 100,000 each. At t he time ofhe time of acquisition their useful life was estimated to be 1
Non-current Assets (Tangible)
Non-current Assets (Tangible)
CHAPTER
CHAPTER
99
of their use, fair market value of one and second was found to be 150,000
of their use, fair market value of one and second was found to be 150,000 and 50 respectively. What isand 50 respectively. What is the amount of revaluation and the
the amount of revaluation and the depreciation charge at the end of fourth ydepreciation charge at the end of fourth year?ear?
11
11
A company has two
A company has two different assets; office equipments and office furniture with carrying values 64,000different assets; office equipments and office furniture with carrying values 64,000 and 85,000 respectively at the
and 85,000 respectively at the start of financial period.start of financial period.
During the year office equipment was valued and its fair market value was 10,000 more than its original During the year office equipment was valued and its fair market value was 10,000 more than its original price when it was
price when it was bought three years back. However, office furniture was bought three years back. However, office furniture was assessed for revaluation at theassessed for revaluation at the end of year where fair market value was 85,000.
end of year where fair market value was 85,000.
Company depreciates office equipment on the basis of hours used and o
Company depreciates office equipment on the basis of hours used and o ffice furniture is depreciatedffice furniture is depreciated using reducing balance method at 15%. It is estimated that during a year equipment is used for 5,000 using reducing balance method at 15%. It is estimated that during a year equipment is used for 5,000 hours where office equipment, when bought, had an
hours where office equipment, when bought, had an expected life of 40,000 hours.expected life of 40,000 hours. Draw up
Draw up 1.
1. Office equipment account and office furniture Office equipment account and office furniture accountaccount 2.
2. Accumulated depreciation accounts of office equipment and furnitureAccumulated depreciation accounts of office equipment and furniture 3.
3. Relevant extracts from Income Statement and Balance SheetRelevant extracts from Income Statement and Balance Sheet
12
12
Change depreciation method is a change in: Change depreciation method is a change in:
A.
A. Accounting policyAccounting policy B.
B. Accounting estimateAccounting estimate C.
C. Accounting presentationAccounting presentation D.
D. All of the aboveAll of the above
13
13
Which of the following statement is true
Which of the following statement is true regarding selection of depreciation method?regarding selection of depreciation method? I.I. Entity is free to Entity is free to choose any depreciation method they think suitablechoose any depreciation method they think suitable II.
II. Entity can use only those Entity can use only those depreciation methods that are mentioned in Internationaldepreciation methods that are mentioned in International Accounting Standards
Accounting Standards III.
III. Entity can use any depreciation method that conforms to Entity can use any depreciation method that conforms to the rate at the rate at which benefits arewhich benefits are rendered from the asset
rendered from the asset A.
A. I onlyI only B.
B. II onlyII only C.
C. II and III onlyII and III only D.
Non-current Assets (Tangible)
Non-current Assets (Tangible)
CHAPTER
CHAPTER
99
14
14
Tick the correct
Tick the correct statement(s)statement(s) In reducing balance method: In reducing balance method:
Higher depreciation expense is charged in earlier years of Higher depreciation expense is charged in earlier years of useful lifeuseful life
Higher depreciation expense is charged in later years of Higher depreciation expense is charged in later years of useful lifeuseful life
Depreciation expense increases over time due Depreciation expense increases over time due to reducing balanceto reducing balance