Depreciation AS level

A business purchased a new delivery van. The total amount paid is made up of the basic cost of the delivery and the following: 

1 changing the inside to carry tools and materials 

2 one year’s insurance and servicing 

3 painting the exterior with the business name 

Which items are included in the total to be entered in non-current assets? 

• 1 and 2 only

• 1 and 3 only

• 2 and 3 only

• 1, 2 and 3

A business has a year end of 31 December. It depreciates its motor vehicles over four years using the straight-line method. A full year’s depreciation is charged in the year of purchase, but none in the year of sale. 

A motor vehicle purchased on 1 July 2016 for $18 000 had an estimated residual value of $4000. The motor vehicle was sold for $5000 on 31 December 2019. 

What was the profit or loss on disposal?

• $1000 loss

• $1000 profit

• $2500 loss

• $2500 profit

A new business has several costs relating to its building. Which costs are classified as revenue expenditure? 

1 cost of an extension to the factory 

2 legal fees on purchase of land 

3 repairs to the warehouse roof

• 1 and 2

• 1 only

• 2 and 3

• 3 only

A motor vehicle costing $8000 is depreciated by 25% per annum using the reducing balance method. After depreciating it for two years it was sold for $4000. 

What is the profit or loss on disposal? 

• $500 loss

• $500 profit

• $2000 loss

• $2000 profit

A company had a non-current asset which cost $370 000. The asset had a 10-year useful life and an estimated residual value of $20 000. A full year’s charge for depreciation is made in every year of use. 

After four years the asset was sold. The loss on disposal was $30 000.

What were the sale proceeds?

• $192 000

• $200 000

• $202 000

• $210 000

What is the journal entry to record the revaluation?

• A

• B

• C

• D

What were the effects of this on the end-of-year statement of financial position?

• A

• B

• C

• D

How is depreciation calculated using the straight-line method?

• as a fixed percentage of the asset’s net book value

• as a fixed percentage of the asset’s original cost

• as a variable percentage of the asset’s net book value

• as a variable percentage of the asset’s original cost