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WorksheetsFR - NCA + Other standard
Total questions: 29
Worksheet time: 56mins
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
Which of the following statements are correct?
1 IAS 16 Property, plant and equipment requires entities to disclose the purchase date of each
asset.
2 The carrying amount of a non-current asset is the cost or valuation of that asset less accumulated
depreciation.
3 IAS 16 Property, plant and equipment permits entities to make a transfer from the revaluation
surplus to retained earnings for excess depreciation on revalued assets.
4 Once decided, the useful life of a non-current asset should not be changed.
1, 2 and 3
2 and 3 only
2 and 4 only
1, 2 and 4 only
What is the journal entry to record the transfer of excess depreciation from the revaluation surplus to
retained earnings?
Dr Revaluation surplus $20,000 Cr Retained earnings $20,000
Dr Revaluation surplus $12,500 Cr Retained earnings $12,500
Dr Retained earnings $20,000 Cr Revaluation surplus $20,000
Dr Revaluation surplus $12,500 Cr Retained earnings $12,500
Gusna Co purchased a building on 31 December 20X1 for $750,000. At the date of acquisition, the useful life of the building was estimated to be 25 years and depreciation is calculated using the straight-line method. At31 December 20X6, an independent valuer valued the building at $1,000,000 and the revaluation was recognised in the financial statements. Gusna’s accounting policies state that excess depreciation arising on revaluation of non-current assets can be transferred from the revaluation surplus to retained earnings.
What is the depreciation charge on the building for the year ended 31 December 20X7?
$40,000
$50,000
$30,000
$42,500
Which of the following should be disclosed for tangible non-current assets according to IAS 16 Property, plant and equipment?
1 Depreciation methods used and the total depreciation allocated for the period
2 A reconciliation of the carrying amount of non-current assets at the beginning and end of the
period
3 For revalued assets, whether an independent valuer was involved in the valuation
4 For revalued assets, the effective date of the revaluation
1, 2 and 4 only
1 and 2 only
1, 2, 3 and 4
1, 3 and 4 only
Which of the following should be included in the reconciliation of the carrying amount of tangible noncurrent assets at the beginning and end of the accounting period?
1 Additions
2 Disposals
3 Depreciation
4 Increases/decreases from revaluations
1 and 3 only
1, 2, and 3 only
1, 3 and 4
1, 2, 3 and 4
The components of the cost of a major item of equipment are given below: $
Purchase price 780,000
Import duties 117,000
VAT (refundable) 78,000
Site preparation 30,000
Installation 28,000
Testing 10,000
Initial losses before asset reaches planned performance 50,000
Discounted cost of dismantling and removal at end of useful life 40,000
1,133,000
$1,005,000
$1,005,00
$9,65,000
$9,5,000
At what amount should total inventory be stated in the statement of financial position?
Rs.95,900
Rs.95,100
Rs.103,100
Rs.105,100
In which of the following situations is the net realisable value of an item of inventory likely to be lower than its cost?
The production cost of the item has been falling.
The selling price of the item has been rising
The item is becoming obsolete.
Demand for the item is increasing
Which of the following is NOT the outcome of a biological transformation according to IAS 41?
Growth
Harvest
Procreation
Degeneration
How is a gain or loss arising on a biological asset recognised in accordance with IAS 41?
Included in profit or loss for the year
Adjusted in retained earnings
Shown under 'other comprehensive income'
Deferred and recognised over the life of the biological asset
Isaac Ltd is a company which buys agricultural produce from wholesale suppliers for retail to the general public. It is preparing its financial statements for the year ending 30 September 20X4 and is considering its closing inventory. In addition to IAS 2 Inventories, which of the following accounting standards may be relevant to determining the figure to be included in its financial statements for closing inventories?
IAS 10 Events After the Reporting Period
IAS 38 Intangible Assets
IAS 16 Property, Plant and Equipment
IAS 41 Agriculture
At 31 March 20X7 Tentacle Ltd had 12,000 units of product W32 in inventory, included at cost of $6 per unit. During April and May 20X7 units of W32 were being sold at a price of $5.40 each, with sales staff receiving a 15% commission on the sales price of the product. At what amount should inventory of product W32 be recognised in the financial statements of Tentacle Ltd as at 31 March 20X7?
Rs.5508
Rs.50000
Rs.55000
Rs.55080
In which of the following situations is the net realisable value of an item of inventory likely to be lower than cost?
The production cost of the item has been falling.
The selling price of the item has been rising.
The item is becoming obsolete.
Demand for the item is increasing.
Which of the following statements about IAS 2 Inventories are correct?
1 Production overheads should be included in cost on the basis of a company’s actual level of activity in the period.
2 In arriving at the net realisable value of inventories, settlement discounts must be deducted from the expected selling price.
3 In arriving at the cost of inventories, FIFO, LIFO and weighted average cost formulas are acceptable.
4 It is permitted to value finished goods inventories at materials plus labour cost only, without adding production overheads.
1 only
1 & 2
3 & 4
None of them
In preparing financial statements for the year ended 31 March 20X6, the inventory count was carried out on 4 April 20X6. The value of inventory counted was $36 million. Between 31 March and 4 April goods with a cost of $2.7 million were received into inventory and sales of $7.8 million were made at a mark-up on cost of 30%.
At what amount should inventory be stated in the statement of financial position as at 31 March 20X6?
36.0 million
39.3 million
6.0 million
None of them
At 31 March 20X7 Tentacle had 12,000 units of product W32 in inventory, included at cost of $6 per unit. During April and May 20X7 units of W32 were being sold at a price of $5.40 each, with sales staff receiving a 15% commission on the sales price of the product.
At what amount should inventory of product W32 be recognised in the financial statements of Tentacle as at 31 March 20X7?
$60,000
$55,080
$.55.080
$5,508
Which of the following statements about IAS 20 Accounting for Government Grants and Disclosure of Government Assistance are true?
A government grant related to the purchase of an asset must be deducted from the carrying amount of the asset in the statement of financial position.
Free marketing advice provided by a government department is excluded from the definition of government grants.
Any required repayment of a government grant received in an earlier reporting period is treated as prior period adjustment.
None of the above
According to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, how should a material error in the previous financial reporting period be accounted for in the current period?
By making an adjustment in the financial statements of the current period through the statement of profit or loss, and disclosing the nature of the error in a note.
By making an adjustment in the financial statements of the current period as a movement on reserves, and disclosing the nature of the error in a note.
By restating the comparative amounts for the previous period at their correct value, and disclosing the nature of the error in a note.
By restating the comparative amounts for the previous period at their correct value, but without the requirement for a disclosure of the nature of the error in a note.
Which of the following would be a change in accounting policy in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors?
Adjusting the financial statements of a subsidiary prior to consolidation as its accounting policies differ from those of its parent.
A change to reporting depreciation charges as cost of sales rather than as administrative expenses.
Depreciation method changed to reducing balance method rather than straight line.
Reducing the value of inventory from cost to net realisable value due to a valid adjusting event after the reporting period.
