Non-Current Assets & Depreciation

Question 1

Characteristics of tangible non-current asset

Answer 1

• Used to drive future economic benefits for the company in increased revenue or decreased costs
• Lead to capitalisation of directly attributable costs
• Depreciate over time
• Hold residual or scrap value at the end of the asset’s useful life

Question 2

Is interest on the loan used to finance the acquisition of non-current assets capitalised?

YES/NO

Answer 2

YES

Question 3

Is testing cost on whether the asset is functioning properly capitalised ?

YES/NO

Answer 3

YES

Question 4

At the end of an asset useful life, the carrying amount is similar under both SLM & RBM

YES/NO

Answer 4

YES

Regardless of which method, business starts and ends at the same position with the same depreciable amount being charged over the useful life

Question 5

What is non current asset register ?

Answer 5

Memorandum document where each asset is listed, including information on all the activities relating to the asset.

Question 6

Items that should be included in the SOFP/ Notes for SOFP for non-current asset

Answer 6

1) The gross carrying amount/cost & accumulated depreciation at the start & end of year

2) Depreciation charged for the period

3) Classified based on appropriate basis