WorksheetsAccounting for depreciation and disposal of non-current assets
Total questions: 15
Worksheet time: 13mins
Explain the straight line method of depreciation
The depreciation is calculated on the net cost price and the same amount is written off each year
The same percentage is written off each year but it is calculated on the net book value of the asset
Why does a business provide for depreciation of its non-current asset?
To set aside a specific fund for the future repair of the non-current asset
To charge the cost of the non-current asset against the profit in the year it is purchased
To show the net book value of the non-current asset in the statement of financial position
To spread the cost of the non-current asset over its useful life
Which of the following is a method of calculating depreciation?
Historical cost method
Straight-line method
Accumulated cost method
Net present value method
What is depreciation?
Assets, such as vehicles and equipment, decrease in value over time as a result of wear and tear. This is expressed in a value which is known as depreciation
Depreciation is a liability and it is calculated each month
Depreciation is expressed as a value to indicate the the increase in the value of Assets
Purchase of property for new office
Capital Expenditure
Revenue Expenditure
With the _____ method of calculating depreciation, the asset is reassessed for value at the end of the financial year.
Straight line
Reducing (diminishing) balance
Revaluation
what is this purpose of making provisions for depreciation
to make a provision for repairs
to make cash availble to replace fixed assets
to show the current market value of the asset
to charge the cost of usage of asset against profit
which of these is NOT a depreciation method
straight line method
reducing balance method
breakeven method
diminishing method
Residual value of the asset means:
The price paid on the purchase of asset
The amount realised on the sale of asset
The net amount expected to realise on final disposal of assets
Reduced value of the asset every year
Depreciation of asset for business is:
Expense
Income
Loss
Games
What is a asset disposal
The statement of _____________
shows the profitability of the business
Cash flows
Profitability
Financial Position
Profit or Loss
A Car was bought for $15000. It is sold after 3 years for $4500. It had been depreciated using the straight line method based on no residual value and an expected life of 5 years. What is the profit or loss on the sale.
Loss of $9500
Profit of $4500
Profit of $1500
Loss of $1500
What are the factors affecting the useful economic life of assets
Liability
Asset
Wear and Tear
Revaluation
What is residual value?
The value of a non-current asset at the start of the project
The value of a non-current asset at the end of the project
The total profit earned from the project
The net cash inflow after depreciation
