Tangible non-current assets II (Y7C6)

1	A car was purchased by a newsagent business in May 20X0 for:
	Cost Road tax Total		$ 10,000 150 10,150
	The business adopts a date of 31 December as its year end. The car was traded in for a replacement vehicle in August 20X3 at an agreed value of $5,000. It has been depreciated at 25% per annum on the reducing balance method, charging a full year's depreciation in the year of purchase and none in the year of sale. What was the profit or loss on disposal of the vehicle during the year ended December 20X3
	A	Profit: $718
	B	Profit: $781
	C	Profit: $1,788
	D	Profit: $1,836
2	The carrying amount of a company's non-current assets was $200,000 at 1 August 20X0. During the year ended 31 July 20X1, the company sold non-current assets for $25,000 on which it made a loss of $5,000. The depreciation charge for the year was $20,000. What was the carrying amount of noncurrent assets at 31 July 20X1?
	A	$150,000
	B	$155,000
	C	$160,000
	D	$180,000
3	Y purchased some plant on 1 January 20X0 for $38,000. The payment for the plant was correctly entered in the cash book but was entered on the debit side of the plant repairs account. Y charges depreciation on the straight line basis at 20% per year, with a proportionate charge in the years of acquisition and disposal, and assuming no scrap value at the end of the life of the asset. How will Y's profit for the year ended 31 March 20X0 be affected by the error?
	A	Understated by $30,400
	B	Understated by $36,100
	C	Understated by $38,000
	D	Overstated by $1,900
4	B acquired a lorry on 1 May 20X0 at a cost of $30,000. The lorry has an estimated useful life of four years, and an estimated resale value at the end of that time of $6,000. B charges depreciation on the straight line basis, with a proportionate charge in the period of acquisition. What will the depreciation charge for the lorry be in B's accounting period to 30 September 20X0?
	A	$3,000
	B	$2,500
	C	42,000
	D	$5,000
5	At 31 December 20X3 Q, a limited liability company, owned a building that had cost $800,000 on 1 January 20W4. It was being depreciated at 2% per year. On 31 December 20X3 a revaluation to $1,000,000 was recognised. At this date the building had a remaining useful life of 40 years. What is the balance on the revaluation surplus at 31 December 20X3 and the depreciation charge in the statement of profit or loss for the year ended 31 December 20X4?
		Depreciation charge for year ended 31 December 20x4 (statement of profit or loss) $				Revaluation surplus as at 31 December 20x3 (statement of financial position) $
	A	25,000				200,000
	B	25,000				360,000
	C	20,000				200,000
	D	20,000				360,000
6	Which of the following best explains what is meant by 'capital expenditure'?
	A	Expenditure on non-current assets, including repairs and maintenance
	B	Expenditure on expensive assets
	C	Expenditure relating to the issue of share capital
	D	Expenditure relating to the acquisition or improvement of non-current assets
7	Which of the following costs would be classified as capital expenditure for a restaurant business?
	A	A replacement for a broken window
	B	Repainting the restaurant
	C	An illuminated sign advertising the business name
	D	Cleaning of the kitchen floors
8	Which one of the following costs would be classified as revenue expenditure on the invoice for a new company car?
	A	Road tax
	B	Number plate
	C	Fitted stereo radio
	D	Delivery costs
9	Lance is entering an invoice for a new item of equipment in the accounts. The invoice shows the following costs:
	Water treatment equipment                          $39,800 Delivery                                                          $1,100 Maintenance charge                                        $3,980 Sales tax                                                            $7,854 Invoice total                                                      $52,734
	Lance is registered for sales tax. What is the total value of capital expenditure on the invoice?
	A	$39,800
	B	$40,900
	C	$44,880
	D	$52,734
10	Which one of the following assets may be classified as a non-current asset in the financial statements of a business?
	A	A tax refund due next yea
	B	A motor vehicle held for resale
	C	A computer used in the office
	D	Cleaning products used to clean the office floors
11	Which of the following items should be included in current assets?
	(i)	Assets which are not intended to be converted into cash
	(ii)	Assets which will be converted into cash in the long term
	(iii)	Assets which will be converted into cash in the near future
	A	(i) only
	B	(ii) only
	C	(iii) only
	D	(ii) and (iii)
12	Which of the following statements describes current assets?
	A	Assets which are currently located on the business premises
	B	Assets which are used to conduct the organisation’s current business
	C	Assets which are expected to be converted into cash in the short-term
	D	Assets which are not expected to be converted into cash in the short-term
13	Gamma purchases a motor vehicle on 30 September 20X1 for $15,000 on credit. Gamma has a policy of depreciating motor vehicles using the reducing balance method at 15% per annum, pro rata in the years of purchase and sale. What are the correct ledger entries to record the purchase of the vehicle at 30 September 20X1 and what is the depreciation charge for the year ended 30 November 20X1?
		Purchase of motor vehicle on 30.9.x1					Depreciation charge for year ended 30.11.x1
	A	Dr Non-current assets – cost  Cr Payables			$15,000 $15,000		$2,250
	B	Dr Payables Cr Non-current assets – cost			$15,000 $15,000		$2,250
	C	Dr Non-current assets – cost Cr Payables			$15,000 $15,000		$375
	D	Dr Payables Cr Non-current assets – cost			$15,000 $15,000		$375
14	Banjo Co purchased a building on 30 June 20X8 for $1,250,000. At acquisition, the useful life of the building was 50 years. Depreciation is calculated on the straight-line basis. 10 years later, on 30 June 20Y8 when the carrying amount of the building was $1,000,000, the building was revalued to $1,600,000. Banjo Co has a policy of transferring the excess depreciation on revaluation from the revaluation surplus to retained earnings. Assuming no further revaluations take place, what is the balance on the revaluation surplus at 30 June 20Y9?
	A	$335,000
	B	$310,000
	C	$560,000
	D	$585,000
15	A non-current asset (cost $15,000, depreciation $10,000) is given in part exchange for a new asset costing $20,500. The agreed trade-in value was $5,500. Which of the following will be included in the statement of profit or loss?
	A	A profit on disposal $5,500
	B	A loss on disposal $4,500
	C	A loss on purchase of a new asset $5,500
	D	A profit on disposal $500
16	Baxter Co purchased an asset for $100,000 on 1.1.X1. It had an estimated useful life of 5 years and it was depreciated using the straight line method. On 1.1.X3 Baxter Co revised the remaining estimated useful life to 8 years. What is the carrying amount of the asset at 31.12.X3?
	A	$40,000
	B	$52,500
	C	$40,000
	D	$62,500
17	Senakuta Co purchased a machine with an estimated useful life of 5 years for $34,000 on 30 September 20X5. Senakuta Co planned to scrap the machine at the end of its useful life and estimated that the scrap value at the purchase date was $4,000. On 1 October 20X8, Senakuta revised the scrap value to $2,000 due to the decreased value of scrap metal. What is the depreciation charge for the year ended 30 September 20X9?
	A	$7,000
	B	$6,800
	C	$2,800
	D	$6,400
18	Evans Co purchased a machine with an estimated useful life of 10 years for $76,000 on 30 September 20X5. The machine had a residual value of $16,000. What are the ledger entries to record the depreciation charge for the machine in the year ended 30 September 20X8?
	A	Dr Depreciation charge Cr Accumulated depreciation		$6,000 $6,000
	B	Dr Depreciation charge Dr Non-current assets Cr Accumulated depreciation		$6,000 $12,000 $18,000
	C	Dr Accumulated depreciation Cr Depreciation charge		$6,000 $6,000
	D	Dr Accumulated depreciation Cr Non-current assets		$18,000 $18,000
19	Banter Co purchased an office building on 1 January 20X1. The building cost was $1,600,000 and this was depreciated by the straight line method at 2% per year, assuming a 50-year life and nil residual value. The building was re-valued to $2,250,000 on 1 January 20X6. The useful life was not revised. The company’s financial year ends on 31 December. What is the balance on the revaluation surplus at 31 December 20X6?
	A	$650,000
	B	$792,000
	C	$797,000
	D	$810,000
20	A company purchased an asset on 1 January 20X3 at a cost of $1,000,000. It is depreciated over 50 years by the straight line method (nil residual value), with a proportionate charge for depreciation in the year of acquisition and the year of disposal. At 31 December 20X4 the asset was re-valued to $1,200,000. There was no change in the expected useful life of the asset. The asset was sold on 30 June 20X5 for $1,195,000. What profit or loss on disposal of the asset will be reported in the statement of profit or loss of the company for the year ended 31 December 20X5?
	A	Profit of $7,500
	B	Profit of $235,000
	C	Profit of $247,500
	D	Loss of $5,000