FR - NCA + Other standard

Wether by purchased a machine on 1 July 20X7 for $500,000. It is being depreciated on a straight line basis over its expected life of ten years. Residual value is estimated at $20,000. On 1 January 20X8, following a change in legislation, Wether by fitted a safety guard to the machine. The safety guard cost $25,000 and has a useful life of five years with no residual value.

What amount will be charged to profit or loss for the year ended 31 March 20X8 in respect of depreciation on this machine?

• 49,250

• 37,250

• 41,000

• 40,000

An aircraft reqires a planned overhaul each year at a cost of $5,000. This is a condition of being allowed to fly.

How should the cost of the overhaul be treated in the financial statements?

• Accrued for over the year and charged to maintenance expenses

• Provided for in advance and charged to maintenance expenses

• Capitalized and depreciated over the period to the next overhaul

• Charged to profit or loss when the expenditure takes place

Auckland purchased a machine for $60,000 on 1 January 20X7 and assigned it a useful life of 15 years. On 31 March 20X9 it was revalued to $64,000 with no change in useful life.

What will be depreciation charge in relation to this machine in the financial statements of Auckland for the year ending 31 December 20X9?

• 4,000

• 3,765

• 4,765

• 5,000

On 1 October 20X5 Dearing acquired a machine under the following terms.

$

Manufacturer’s base price - 1,050,000

Trade discount (applying to base price only) - 20%

Early settlement discount taken (on the payable - 5%

amount of the base cost only)

Freight charges - 30,000

Electrical installation cost - 28,000

Staff training in use of machine - 40,000

Pre-production testing - 22,000

Purchase of a three-year maintenance contract - 60,000

On 1 October 20X7 Dearing decided to upgrade the machine by adding new components at a cost of $200,000. This upgrade led to a reduction in the production time per unit of the goods being manufactured using the machine.

What amount should be recognized under non-current assets as the cost of the machine as on 30 sept 20X6?

• $840,000

• $920,000

• $898,000

• $870,000

What is the purpose of charging depreciation in financial statements?

• To allocate the cost of a non-current asset over the accounting periods expected to benefit from its use

• To ensure that funds are available for the eventual replacement of the asset

• To reduce the cost of the asset in the statement of financial position to its estimated market value

• To account for the ‘wearing-out’ of the asset over its life

Which of the statements below correctly states the purpose of the asset register?

• An internal control to ensure details of all assets are readily available in the event of loss or theft

• To ensure the organisation is aware of the age of plant and machinery

• An internal control to ensure information relating to non-current assets in the nominal ledger and the financial statements is correct

• To enable the organisation to comply with IAS 16 Property, plant and equipment

Which one of the following would occur if the purchase of computer stationary was debited to the

computer equipment at cost account?

• An overstatement of profit and an overstatement of non-current assets

• An understatement of profit and an overstatement of non-current assets

• An overstatement of profit and an understatement of non-current assets

• An understatement of profit and an understatement of non-current assets

Which one of the following statements correctly defines non-current assets?

• Assets that are held for use in the production of goods or services and are expected to be used during more than one accounting period

• Assets which are intended to be used by the business on a continuing basis, including both tangible and intangible assets that do not meet the IASB definition of a current asset

• Non-monetary assets without physical substance that are controlled by the entity and from which future benefits are expected to flow

• Assets in the form of materials or supplies to be consumed in the production process

A company bought a property four years ago on 1 January for $ 170,000. Since then property prices

have risen substantially and the property has been revalued at $210,000.

The property was estimated as having a useful life of 20 years when it was purchased. What is the

balance on the revaluation surplus reported in the statement of financial position?

• $210,000

• $136,000

• $74,000

• $34,000

What are the correct ledger entries to record an acquisition of a non-current asset on credit?

• Dr. Non-current assets – Cr. cost Receivables

• Dr. Payables Non-current assets – Cr. cost

• Dr. Non-current assets – Cr. cost Payables

• Dr. Non-current assets – Cr. cost Revaluation surplus