Non-Current Assets Flashcards
- Trentham transport purchases a new delivery truck for $70,000. The stamp and transfer duty is $3,000. The logo of the company is painted on the side of the truck for $1000. The truck registration is $700 and a 12 month accident insurance policy is $1,200. The truck undergoes safety testing for $350. What does Trentham Transport record as the cost of the new truck?
a. $75,200
b. $74,350
c. $75,350
d. $76,250
b. $74,350
- Replacement of worn gears out gears on factory machinery is an example of …
a. Revenue expenditure
b. Capital expenditure
a. Revenue Expenditure
- Painting the extierior of a buliding is an example of a …
a. Revenue expenditure
b. Capital expenditure
a. Revenue expenditure
What does a Capital expenditure do?
Extends assets useful life and or, increases its capacity or efficiency
What does a Revenue expenditure do?
Maintains the asset in it’s working order.
Or if it is a insignificant amount
Painting and lettering of a used truck upon acquistion of the truck is a:
a. Revenue Expenditure
b. Capital Expenditure
b. Capital Expenditure
Replacing a pentium chip with a core 2 Duo chip, Whihc increases productive capacity. No extention of useful life expected. This should be treated as:
a. Revenue expenditure
b. Capital expenditure
b. Capital expenditure
Overhaul of a truck motor. One-year extention in useful life is expected. This should be treated as a:
a. Revenue expenditure
b. Capital expenditure
b. Capital expenditure
Purchased a wastebasket for $30 is a…
a. Revenue expenditure
b. Capital expenditure
a. Revenure expenditure
Computer installation cost should be claisfiied as an…
Equipment cost
Driveway cost should be clasified as
land imporovements
Grading cost should be clasified as…
Land
It is preparing land for land improvements. Therefore is a land cost
Cost of lighting for a parking lot should be clasified as…
Land improvement
Insurance and frieght on eqiupment should be classified as…
Equipment
Cost of tearing down a warehouse on land just purcahsed should be classified as…
Land
A Truck was purchased for $15,000 and it was estimated to a $3,000 residual value at the end of its useful life. Monthly deprecetiation expense of $250 was recored using the striaght line method The annual depreciation rate is?
a. 20%
b. 25%
c. 8%
d. 2%
b. 25%
Annual depreciation / Purchase price - residual value
A company purchased factory equipment on April 1, 2023, for $48,000. It is estimated that the equipment will have a $6,000 residual value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at 31 december 2023, is:
a. $4,800
b. $3,150
c. $4,200
d. $3,600
b. $3,150
48,000 - 6,000 / 10 * 9/12
. Depreciation is a process of:
Cost allocation
A plant asset was purchased on 1 January for $50,000 with an estimated residual value of
$10,000 at the end of its useful life. The current year’s depreciation expense is $4,000
calculated on the straight-line basis and the balance of the Accumulated depreciation account
at the end of the year is $16,000. The remaining useful life of the plant asset is:
. 10 years.
b. 8 years.
c. 5 years.
d. 6 years
d. 6 years
Equipment with a cost of $160,000 has an estimated residual value of $10,000 and an
estimated life of 4 years or 12,000 hours. It is to be depreciated by the diminishing value
method with a constant depreciation rate of 37.5%. What is the amount of depreciation
expense for the first full year, during which the equipment was used 3,300 hours?
a. $60,000.
b. $80,000.
c. $56,250.
d. $55,500.
A. 60,000
Equipment with a cost of $180,000 has an estimated residual value of $15,000 and an
estimated life of 4 years or 15,000 hours. It is to be depreciated by the units-of-production
method. What is the amount of depreciation expense for the first full year, during which the
equipment was used 3,000 hours?
a. $36,000.
b. $33,000.
c. $42,500.
d. $37,500
b. 33,000
The balance in the Accumulated depreciation account represents the:
amount charged to expense since the acquisition of the plant asset.
Endevour Enterprises acquires land for $250,000 cash. Additional costs are as follows:
Removal of old building $6,700
Salvage of building materials from old building $1,500
Filling and grading $2,500
Broker commission $3,300
Paving of parking lot $30,000
Stamp duty $7,000
Endevour Enterprises will record the acquisition cost of the land as:
a. $268,000
b. $250,000
c. $298,000
d. $269,500
a. $268,000 [250,000 + 3,300 + 7,000 + 6,700 + 2,500 – 1,500]
Which of the following statements regarding depreciation is true?
a. All property, plant and equipment assets must be depreciated.
b. Recording deprecation on plant assets affects the income statement only.
c. In calculating depreciation expense both the cost of the asset and its residual value are
estimates.
d. Depreciable amount is the cost of the asset less its residual value
*d. Depreciable amount is the cost of the asset less its residual value