Acquisition of Non Current Assets Flashcards
Non-current assets are
items purchased for longer term use in the business
Non-current assets will be recorded on the _____ side of the appropriate account
debit
Examples of non-current assets include….
office equipment, fixtures & fittings and motor vehicles.
The two main methods for calculating depreciation charges are….
the straight line and diminishing balance.
The depreciation charges are always recorded in the same way….
Dr Depreciation charge (this account is shown on the statement of profit or loss). Cr Accumulated depreciation (this account is shown on the statement of financial position).
The straight line basis will charge the __________ of depreciation to the statement of profit or loss each year.
same amount
The double entry to record the depreciation charge in the first year is….
Dr Depreciation charge
Cr Accumulated depreciation
accumulated depreciation reduces…..
the value of the asset over it useful life
Create a disposals account. This is a temporary account which we are going to use to calculate a gain or loss on disposal of the asset.
Transfer the cost and accumulated depreciation on the asset into this account by means of double entry….
Dr Disposals
Cr Non-current asset - cost
Dr Accumulated depreciation
Cr Disposals
Record the receipt of disposal proceeds….
Dr Bank
Cr Disposals
The balancing figure on the disposals account, which represents the gain or loss on disposal, is transferred to the statement of…..
profit or loss.
If a balancing figure is needed on the debit side of the disposals account, this represents a gain on disposal. It would recorded as…
Dr Disposals
Cr Statement of profit or loss
If a balancing figure is needed on the credit side of the disposals account, this represents a loss on disposal .
It would be recorded as….
Dr Statement of profit or loss
Cr Disposals
