BINA BANGSA SCHOOL 40

ACCOUNTING 40
Graded Classwork│Secondary 3 Express│Semester 2
Chapter 12: Accounting for Depreciation and Disposal of Non-current Assets

Name: ___________________________________ Date: April 3, 2024, Wednesday

MULTIPLE CHOICE QUESTIONS

1 Why is depreciation recorded in the income statement?

A to provide cash to replace assets when they are worn out
B to show the assets in the statement of financial position at their market values
C to show when the assets need to be replaced
D to spread the cost of the assets over their useful lives.
Cost 0 8 NOV
2 A machine cost $200 000 is bought on 31 December 2020. 2021 200000 50000 150000
It is depreciated by the reducing balance method at 25% per annum.
2022 200000 87500 112500
What is the accumulated depreciation for the year ended 31 December 2022?

A $37 500 B $50 500 C $87 500 D $115 625

Pfdepreciation 31 Dec2022 150 000 25 0 37500

3 A trader prepares a disposal account.
On which side do the cost of the asset and sale proceeds appear?

Cost of the asset Sale proceeds

A Credit Credit 33
B Credit Debit

C Debit Credit

D Debit Debit 19
19
4 The following information relates to the disposal of a non-current asset. Disposal
$
22800
Loss on disposal
Cost of non-current asset sold/disposed
3 500
22 800
Bank4288
Sale proceeds 7 200 115 3500
22800 22800
What was the accumulated depreciation on the non-current asset sold/disposed?

A $37 500 B $50 500 C $87 500 D $115 625

Answer for Multiple Choice Questions

1 2 3 4

D C C no answer
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 STRUCTURED QUESTIONS

1 On 1 January 2022, Kelvin Cleaners Ltd provided the following information:

$
Plant and machinery 48 000
Accumulated depreciation of plant and machinery 9 600

On 1 July 2023, Kelvin Cleaners Ltd purchased a new machine for $30 000 by cheque.
The business depreciates its assets using the reducing balance method at 20% per annum.
The depreciation is charge from the date of purchase.

REQUIRED

(a) Prepare a plant and machinery account for the year ended 31 December 2022 and
31 December 2023.

Kelvin Cleaners Ltd

Plant and machinery account

Date Details $ Date Details $

2022
……………………………………………………... 2022
……………………………………………………...

Jan Bal bld 48000 31

1……………………………………………………... Dec Bal old 48 000
……………………………………………………...

48000
000
……………………………………………………... ……………………………………………………... 48
……………………………………………………... ……………………………………………………...

5 2023 2023
……………………………………………………... ……………………………………………………...

1Jan Bal bld 48000 31 Dec Bal cld 78000

I 1Jul Bank
……………………………………………………... ……………………………………………………...

30000 ……………………………………………………...
……………………………………………………...

78000 ……………………………………………………...
……………………………………………………... 78 000
……………………………………………………... ……………………………………………………...

2024
……………………………………………………... ……………………………………………………...

Jan Bal bld 78000

1……………………………………………………... ……………………………………………………...

……………………………………………………... ……………………………………………………...

to dates
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 (b) Prepare the provision for depreciation account of plant and machinery for the year ended
31 December 2022 and 31 December 2023.

Kelvin Cleaners Ltd

Provision for depreciation of plant and machinery account

Date Details $ Date Details $

2022
……………………………………………………... 2022
……………………………………………………...

31 Dec Bal old

……………………………………………………... Jan Bal bld
17280 1……………………………………………………...
9600
……………………………………………………... 31
statement 7680
Dec Income
……………………………………………………...

17280 ……………………………………………………...
……………………………………………………... 17280
……………………………………………………... ……………………………………………………...

7 ……………………………………………………... 2023
2023 ……………………………………………………...

31 Dec Bal old

……………………………………………………... Jan Bal bld
26424 1……………………………………………………...
17280
7 ……………………………………………………... 31Dec Income statement
……………………………………………………...

……………………………………………………... ……………………………………………………... 6144

30009144
……………………………………………………... ……………………………………………………...

26424
26424 ……………………………………………………...
……………………………………………………...

……………………………………………………... ……………………………………………………...

……………………………………………………... ……………………………………………………... 2024

……………………………………………………... Jan Bal bld
1……………………………………………………...
26424
1 dates
[7]

Depreciation 31 Dec 2022

NBV 48000 9600 38400
38400 X 20 7680

Depreciation 31 Dec 2023

plant and machinery old asset plant and machinery new
NBV 48000 17280 30720 30000 X 20 6000
30720 20 6144
 (c) Prepare a relevant extract from income statement for the year ended 31 December 2023.

Kelvin Cleaners Ltd

Extract from income statement for the year ended 31 December 2023

Gross profit xxx

………………………………………………………………………………………………………………………………………………
22 Less Expenses
………………………………………………………………………………………………………………………………………………

Provision for depreciation of plantandmachinery 9144

……………………………………………………………………………………………………………………………………………… [2]

(d) Prepare a relevant extract from statement of financial position at 31 December 2023.

Kelvin Cleaners Ltd

Extract from statement of financial position at 31 December 2023

………………………………………………………………………………………………………………………………………………
4 Assets Cost Accumulated Netbook
………………………………………………………………………………………………………………………………………………

4 Non current assets depreciation value

………………………………………………………………………………………………………………………………………………

Plant and machinery 78000 26424 51576

………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………… [4]

1 Jan 2019 31 Dec 2019

 1 Jan 2020 31 Dec 2020
2 Motorama Pte Ltd had the following ledger account balances at 1 January 2019:
$
Motor vehicles 100 000
Provision for depreciation of Motor Vehicles 44 000

Depreciation is provided at the rate of 20% of the cost of the motor vehicles.
A full year depreciation is charged in the year of purchase but no depreciation is charged in the
year of disposal.

A vehicle cost $30 000 bought in 30 September 2017 was sold for $9 000 on 1 November 2020.
A cheque was received from the slae proceeds.
He
REQUIRED

(a) Explain how providing depreciation of non-current assets is an application of the principle
of matching.

depreciation of non current assets is an

………………………………………………………………………………………………………………………………………………
Providing
application of matching principle because
………………………………………………………………………………………………………………………………………………

the loss in value of the non current assets

………………………………………………………………………………………………………………………………………………

during the year is matched against the

………………………………………………………………………………………………………………………………………………

revenue of the same period

………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………… [2]
 (b) Prepare the following accounts in the ledger of Motorama Pte Ltd.

(i) Motor vehicles account

Balance the account at the end of each year and bring down the balance on 1 January 2020
and 1 January 2021.

Motorama Pte Ltd

Motor Vehicles Account

Date Details $ Date Details $

2019
……………………………………………………... 2019
……………………………………………………...

Jan Bal b d 100000 31

1……………………………………………………... Dec Balold 100000
……………………………………………………...

100 000
100 000 ……………………………………………………...
……………………………………………………...

……………………………………………………... ……………………………………………………...

……………………………………………………... 2020
2020 ……………………………………………………...

Jan Bal bld Nov Disposal

100000 1……………………………………………………...
1……………………………………………………... 30000
……………………………………………………... 31Dec Bal old 70000
……………………………………………………...
5 100000
100000 ……………………………………………………...
……………………………………………………...

5 ……………………………………………………... ……………………………………………………...

2021
blat
……………………………………………………... ……………………………………………………...

Jan Bal 70000

1……………………………………………………... ……………………………………………………...

……………………………………………………... ……………………………………………………...

1 dates [5]
 (ii) Provision for depreciation of motor vehicle account

Balance the account at the end of each year and bring down the balance on 1 January 2020
and 1 January 2021.

Motorama Pte Ltd

Provision for depreciation of motor vehicles account

Date Details $ Date Details $

2019
……………………………………………………... 2019
……………………………………………………...

31 Dec Bal old 64000 1……………………………………………………...

……………………………………………………... Jan Bal
statement
44000 bld
……………………………………………………... 31Dec Income 20000
……………………………………………………...

64000 ……………………………………………………...
……………………………………………………... 64000
……………………………………………………... ……………………………………………………...

2020
……………………………………………………... 2020
……………………………………………………...

Nov Disposal
1……………………………………………………... 1Jan Bal bld
18000 ……………………………………………………... 64000
31Dec Bal old 60000 31
……………………………………………………... Dec Incomestatement 14000
……………………………………………………...

78000 ……………………………………………………...
……………………………………………………... 78000
8 ……………………………………………………... ……………………………………………………...

……………………………………………………... 2021
……………………………………………………...

60000
……………………………………………………... 1……………………………………………………... Jan Bal bld

1 dates [8]
I Nov 2020 Debit Disposal 30000
Credit Motorvehicle 30000

Debit Provision fordepreciation of motorvehicle 18000

Credit Disposal 18000

2017 Oct Nov Dec 30000 202 6000

Jan Dec 30000 20 6000

2018
2019 Jan Dec 30000K 20 6000

18000
2020

Debit Bank 9000

Credit Disposal 9000

No No No No No No oxo
Depreciation charge 31 Dec 2020
70000 20 14000
remaining
asset
 (c) Prepare the motor vehicle disposal account.

Motorama Pte Ltd

Motor vehicle disposal account

Date Details $ Date Details $

2020
……………………………………………………... 2020
……………………………………………………...
1Nov Motorvehicle 30000 1……………………………………………………...
……………………………………………………... Nov Provisionfor
depreciation 18000
9000
……………………………………………………... ……………………………………………………... Bank
……………………………………………………... 31Dec 115 3000
……………………………………………………...

30000
30000 ……………………………………………………...
……………………………………………………...

4 ……………………………………………………... ……………………………………………………...

I
……………………………………………………... ……………………………………………………...

……………………………………………………... ……………………………………………………...

……………………………………………………... ……………………………………………………...

……………………………………………………... ……………………………………………………...

……………………………………………………... ……………………………………………………...

……………………………………………………... ……………………………………………………...

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End of Classwork