Prosocial Behavior
QUESTION 1
Which of these is not an advantage of the straight line method of depreciation?
A It is easy to work out due to a simple formula
B Calculated once for all the years
C Depreciation added to maintenance costs rise as the asset ages
D The cost of the asset is spread evenly through its useful life.
Which of the following is not correct regarding depreciation?
A It is due to the use of an asset
B Is not incurred if the asset is not used
C It is a portion of a long term expense
D It is value which is used up.
QUESTION 9
Which method of depreciation is the best for showing the decline in value of the asset being proportional to the diminishing benefits as the asset gets older?
A Reducing balance
B Straight-line
C Fixed instalment
D Units of production
(a) Depreciation of non-current assets occurs due to the _______________ principle of accounting.
This principle requires that:
For example:
[2 marks]
(b) List and explain two reasons for depreciation
(c) How is the cost of a depreciable non-current asset calculated?
(d) List and explain three factors which are considered when calculating depreciation.
QUESTION 15 – 8 marks
Tom Jones' operates a screen printing and design business. On 1 January 2013 he purchased a computer at a cost of $5 000 and a laser printer for $2 000. The computer is depreciated at 20% per annum on a reducing balance basis and the laser printer which has an estimated useful life of 6 years and an estimated residual value of $200 is depreciated on a straight line basis.
Calculations
(a) What is the depreciation expense figure per annum for the printer?
[1 mark]
(b) Show the General Journal entry for the purchase of the computer.
[2 mark]
Date Description Ref. Debit Credit
(c) Show the relevant ledger accounts to record the depreciation of the computer as at 30 June 2014.
[5 marks]
Date Description Amount Date Description Amount
Which of these is not an advantage of the straight line method of depreciation?
A It is easy to work out due to a simple formula
B Calculated once for all the years
C Depreciation added to maintenance costs rise as the asset ages
D The cost of the asset is spread evenly through its useful life.
Which of the following is not correct regarding depreciation?
A It is due to the use of an asset
B Is not incurred if the asset is not used
C It is a portion of a long term expense
D It is value which is used up.
QUESTION 9
Which method of depreciation is the best for showing the decline in value of the asset being proportional to the diminishing benefits as the asset gets older?
A Reducing balance
B Straight-line
C Fixed instalment
D Units of production
(a) Depreciation of non-current assets occurs due to the _______________ principle of accounting.
This principle requires that:
For example:
[2 marks]
(b) List and explain two reasons for depreciation
(c) How is the cost of a depreciable non-current asset calculated?
(d) List and explain three factors which are considered when calculating depreciation.
QUESTION 15 – 8 marks
Tom Jones' operates a screen printing and design business. On 1 January 2013 he purchased a computer at a cost of $5 000 and a laser printer for $2 000. The computer is depreciated at 20% per annum on a reducing balance basis and the laser printer which has an estimated useful life of 6 years and an estimated residual value of $200 is depreciated on a straight line basis.
Calculations
(a) What is the depreciation expense figure per annum for the printer?
[1 mark]
(b) Show the General Journal entry for the purchase of the computer.
[2 mark]
Date Description Ref. Debit Credit
(c) Show the relevant ledger accounts to record the depreciation of the computer as at 30 June 2014.
[5 marks]
Date Description Amount Date Description Amount