For which non-current assets is the revaluation method of depreciation most appropriate?
Ch 4.2: Depreciation and Disposal of Non-Current Assets

Quiz
•
Education
•
10th Grade
•
Hard

DK SUZELAWATI FAZIDAH PG HJ SULAIMAN
Used 6+ times
FREE Resource
24 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
2 mins • 1 pt
loose tools
motor vehicles
office equipment
plant and machinery
2.
MULTIPLE CHOICE QUESTION
2 mins • 1 pt
Amit depreciates his buildings at the rate of 2% per annum using the straight line method. He bought land for $200 000. It cost $120 000 to build a warehouse on it. After five years he sold the warehouse for $299 000.
What was the profit or loss on disposal?
$9000 loss
$9000 profit
$11 000 loss
$11 000 profit
3.
MULTIPLE CHOICE QUESTION
2 mins • 1 pt
A non-current asset was depreciated at the end of the first year of ownership using the straight-line method based on the following information.
Cost: $20 000
Working life: 4 years
Residual value: $4000
It was found that the reducing balance method at 30% per annum should have been used.
What was the effect on the profit for the year of correcting this error?
decrease by $2000
increase by $2000
decrease by $6000
increase by $6000
4.
MULTIPLE CHOICE QUESTION
2 mins • 1 pt
A machine which cost $32 000 was sold for $14 000. The total depreciation at the date of disposal was $15 000.
What was the profit or loss on disposal?
$3000 profit
$3000 loss
$18 000 profit
$18 000 loss
5.
MULTIPLE CHOICE QUESTION
2 mins • 1 pt
A trader uses the reducing balance method of depreciation.
What effect will this have over the life of the non-current asset?
depreciation charged evenly over the years
more depreciation charged in the early years
more depreciation charged in the later years
the non-current asset being revalued each year
6.
MULTIPLE CHOICE QUESTION
2 mins • 1 pt
Why should a trader provide for the depreciation of a non-current asset?
1. to match the cost against the revenue of the years which benefit from the use of the asset
2. to provide a cash fund to enable the asset to be replaced at the end of its useful life
3. to recognise that most non-current assets lose value with the passage of time
4. to spread the cost of the asset over its expected working life to avoid overstating profit
1 and 2 only
1, 3 and 4
2 and 3 only
2,3 and 4
7.
MULTIPLE CHOICE QUESTION
2 mins • 1 pt
A
B
C
D
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