Non-Current Assets

Question 1

Historical Cost of PPE

Answer 1

Purchase price - discounts + cost associated to PPE - saleable units from testing

Question 2

Basket purchases

Answer 2

Determine market values of each item and allocate the percentage

Question 3

Depreciation of PPE methods

Answer 3

1. Straight Line
2. Declining-balance
3. Units of production

Question 4

Straight Line Depreciation

Answer 4

D = (cost - residual value)/Useful life

Question 5

Units of Production Depreciation

Answer 5

D = [(cost - Residual value)/no. of total Units] x No. of units Produced

Question 6

Declining Balance (double-declining)

Answer 6

d% = 2/useful life
D = NBV x d% (NBV = historical cost - depreciation)
**never go below the residual value

Question 7

Journaling of Depreciation of PPE

Answer 7

Dr Depreciation Expense

Cr Accumulated Depreciation

Question 8

Disposal of PPE (loss + nth achieved)

Answer 8

Dr Accumulated Depreciation
Dr Loss on disposal of PPE
Cr PPE

Question 9

Disposal of PPE (loss + achieved less than RV)

Answer 9

Dr Accumulated Depreciation
Dr Cash at Bank
Dr Loss on disposal of PPE
Cr PPE

Question 10

Disposal of PPE (loss + achieved same as RV)

Answer 10

Dr Accumulated Depreciation
Dr Cash at Bank
Cr PPE

Question 11

Disposal of PPE (loss + achieved more than RV)

Answer 11

Dr Accumulated Depreciation
Dr Cash at Bank
Cr Gain on Disposal of PPE
Cr PPE

Question 12

Disposal of PPE (trade in)

Answer 12

Dr Accumulated depreciation
Dr PPE (new asset)
Cr PPE (old asset)
Cr Cash at Bank (historical cost of new PPE - RV of old PPE)

Question 13

Impairment of PPE

Answer 13

1. Find Net fair Value (fair value - cost of disposal) and Value in use
2. take the higher amount and compare to carrying value
3. if CV is higher, Journal

Dr Impairment Expense
Cr Accumulated Impairment

Question 14

Amortisation of PPE (intangibles)

Answer 14

Dr Amortisation Expense
Cr Accumulated Amortisation

OR
Cr {Intangible Asset Directly}