Depreciation (2)

What are the accounting entries when we remove the accumulated depreciation of non-current assets (NCA)?

Hint: Step 2

• Dr. Accumulated depreciation

  Cr. Disposal

• Dr. Depreciation on NCA

  Cr. Accumulated depreciation

• Dr. Bank/cash

  Cr. Disposal

• Dr. Disposal

  Cr. Cost of NCA

The office equipment was purchased on 1 October 2020, Based on a full-year basis depreciation policy,

How many years should be counted when calculating accumulated depreciation?

(For the year ended 31 December 2024)

• 5 years

• 6 years

• 7 years

• None of them

A lorry (貨車) was purchased on 1 May 2023, the financial year ended on 31 October 2023. Accounting to the monthly basis policy, how many months should be counted when calculating depreciation?

• 1 year

• 8 months

• 6 months

• 5 months

Ada purchased a computer (at the cost of $30,000) on 1 October 2023, the depreciation rate is 30%.

What is the annual depreciation expense for the year ended 31 december 2023?

(by using a monthly basis)

• $2,250

• $5,250

• $4,560

• $9,000

What is the first step when we try to record the disposal (變賣)

• Proceeds received

• Take away NCA's Acc. Dep.

• Record disposal profit/loss

• Take away the cost of NCA

If the net book value is more than (>) disposal value, it should be recorded in the loss on disposal

• Yes

• No

What are the double entries to record the loss on disposal?

• Dr. Loss on disposal

  Cr. Disposal account

• Dr. Gain on disposal

  Cr. Disposal account

• Dr. Disposal account

  Cr. Gain on disposal

• Dr. Disposal account

  Cr. Loss on disposal

The machinery (at the cost of $20,000) was purchased on 1/3/2022. On 31/12/2022, the accumulated depreciation was recorded at $4,000 (full-year basis).

The disposal value of $ 17,000 was sold on 1/4/2023.

What is the amount of disposal profit/loss?

• Loss on disposal

  $ 1,000

• Gain on disposal

  $ 1,000

• Gain on disposal

  $ 3,000

• Loss on disposal

  $ 3,000

On 1 January 2021, you purchased the computer A for $40,000

On 1 January 2023, the trade-in value of the computer A was $5,000 while the cost of the computer B was $30,000. The balance was paid by cheque on the same date.

What are the accounting entries for trade-in transaction?

• Dr. Cost of the computer A $40,000

  Cr. Disposal $35,000

  Cr. Bank $5,000

• Dr. Cost of the computer A $40,000

  Cr. Disposal $5,000

  Cr. Bank $35,000

• Dr. Cost of the computer B $30,000

  Cr. Disposal $25,000

  Cr. Bank $5,000

• Dr. Cost of the computer B $30,000

  Cr. Disposal $5,000

  Cr. Bank $25,000