CHAPTER 9-ACCOUNTING FOR NON-CURRENT ASSETS

A sole trader purchased a machine on 1 January 20X2 for RM30,000. He estimates that he will be able to sell it for just RM5,000 on 1 January 20X7. Assuming that he depreciates the machine on a straight line basis , what will be the depreciation charge in the year ended 31 December 20X4?

• RM5,000

• RM7,500

• RM6,200

• RM6,000

A sole trader bought three identical new machines costing RM16,000 each on 1 January 20X3. Her depreciation policy is to depreciate Property, Plant and Equipment (PPE) at the rate of 20% per annum on a straight line basis. Calculate the carrying amount of the machines to be shown in the Statement of Financial Position (SOFP) at 31 December 20X5?

• RM48,000

• RM38,800

• RM19,200

• RM16,000

On 1 January 20X3 the balance b/f on a sole trader's Motor Vehicles account was RM32,000. During the year ended 31 December 20X3 the trader part exchanged a vehicle which had cost RM8,000 and had accumulated depreciation at the date of sale of RM3,500. The trade in allowance received was RM4,000, and the trader paid an additional RM6,000 in cash for the new vehicle. How will this disposal and purchase be reflected in the Motor Vehicles account?

Total of Debit and and total of Credit in the Motor Vehicles will be:

• Total debits RM10,000

  Total Credits RM8,000

• Total debits RM8,000

  Total Credits RM10,000

• Total debits RM4,000

  Total Credits RM6,000

• Total debits RM6,000

  Total Credits RM8,000

On 1 July 20X4 a sole trader part -exchanged his car. The new car cost RM12,000, and he received a trade-in allowance of RM4,000 in respect of his old car. The old car had a carrying amount at the date of sale of RM5,000.

Which statement below is correct?

• The disposal will result in a profit on sale of RM1,000.

• The double entry to record the trade-in allowance will be :

  debit cash

  credit disposals

• The motor vehicles account will be debited with RM12,000

• None of These

A sole trader has recently sold an item of equipment.

What is the double entry required to remove the accumulated depreciation on this asset from the accounting records?

• DR                           Disposal
  CR           Acc: Depreciation
  
• DR           Acc: Depreciation

  CR                           Disposal
  

On 1 January 20X1 a partnership bought a machine which is to be depreciated over its ten year useful life. It cost RM14,000, and in ten years time it is estimated its value will be RM2,000. On the same date the partnership also bought a new car which cost RM20,000 and is to be depreciated on a diminishing balance basis at the rate of 25% per annum. What will be the total depreciation charge in the statement of profit or loss for the year ended 31 December 20X2?

Tick the correct answer

• 6400

• 4950

• 5150

• 6200

On 1 January 20X2 a partnership bought two new delivery vans costing RM9,000 each. Their policy is to depreciate all vehicles at the rate of 20% per annum on a diminishing balance basis. What will be the balance b/f on the accumulated depreciation account at 1 January 20X4?

• 8784

• 6480

• 7200

• 3234

The main purpose of calculating depreciation on non-current assets is so that the carrying amount which is included in the Statement of Financial Position reflects the current market value of the asset at the end of each year. True or false?

• TRUE
• FALSE

A sole trader sold an asset on 1 June 20X4. She had bought the asset for RM18,000, and accumulated depreciation to the date of sale was RM10,000. Her accounts show a loss on disposal of RM3,000. Calculate the amount of sale proceeds she received.

• 15000

• 11000

• 5000

• NONE OF THESE