WorksheetsQuiz on Accounting Treatment of PPE in Trading Business
Total questions: 10
Worksheet time: 7mins
Which of the following item qualifies as the property, plant and equipment?
A. A building used in the production for more than one accounting period
B. An equipment bought for sale within one accounting period
C. A machine bought for resale to a customer
D. A computer software bought for use in more than one accounting period
Which of the following would NOT be classified as costs directly incurred in bringing the asset into working condition?
A. Marketing costs
B. Delivery and installation charges
C. Site preparation costs
D. Testing costs
Recognition criteria of an asset are:
◦it is probable that future economic benefits associated with the item will flow to the entity; and
◦the cost of the item can be measured realibly.
True
False
Which of the following is NOT an example of directly attributable costs?
A. Professional fees
B. Costs of site preparation
C. Staff training costs
D. Initial delivery and handling costs
Depreciation is defined as the fall in the value of an asset during an accounting period.
True
False
Gain on disposal of property, plant and equipment is recognised as an expense in the profit or loss statement.
True
False
Company H acquired a machine on 1 January 2021.
The cost incurred on the machine:
Purchase price $400,000
Transportation cost $70,000
Staff training cost to operate the machine $50,000.
Calculate the initial cost of the machine on the acquisition date.
A. $400,000
B. $470,000
C. $450,000
D. 520,000
On 1 January 2021, Company F acquired a building that amounted to $1.5 million. The useful life of the building is 50 years and depreciation is calculated using a straight-line method on a yearly basis.
Calculate the depreciation expense on the building for the year ended 31 December 2021.
A. $30,000
B. $75,000
C. $60,000
D. $150,000
What is the accounting entry to record gain on disposal of equipment?
A. Debit Expense in profit or loss
B. Debit Equipment
C. Credit Equipment
D. Credit Income in profit or loss
Determine the correct accounting treatment to record loss on disposal of the machinery for $2,000.
A.Treated as a liability in a financial position
B.Treated as other income in profit or loss
C. Treated as operating income in profit or loss
D. Treated as expense in profit or loss
