Accumulated Depreciation – NBC Institute

FA – Nov 2022 – L1 – SB – Q6b – Accounting for Property, Plant, and Equipment (PPE) in Accordance with IAS 16

This question requires calculating the gain or loss on disposal of a motor vehicle and preparing the necessary ledger accounts.

Question

Propati Limited has a fleet of cars that are used to distribute goods to the market. As at July 1, 2020, the cost of the cars was ₦750,000,000, and their accumulated depreciation was ₦30,500,000. On January 1, 2021, the company bought a new car for ₦2,800,000. One of the old cars, which was acquired 3 years ago at a cost of ₦1,000,000 with accumulated depreciation of ₦600,000, was accepted by the seller in part exchange at a value of ₦480,000. The reporting date of Propati Limited is December 31, and the entity charges depreciation using the straight-line method.

Required:
i. Calculate the gain or loss on disposal of the old car. (2 Marks)
ii. Prepare the following ledger accounts in respect of the transactions:

Disposal of motor vehicle account (2 Marks)
Motor vehicles account (4 Marks)
Accumulated depreciation account (2 Marks)

Answer

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Tags: Accumulated Depreciation, Disposal, Gain or Loss, Ledger Accounts, Motor Vehicles
Level: Level 1

Topic: Accounting for Property, Plant, and Equipment (PPE) IAS 16
Series: NOV 2022

FA – Mar 2024 – L1 – Q1b – Non-current assets and depreciation

Prepare journal entries for the depreciation, revaluation, and disposal of non-current assets.

Question

The draft statement of financial position of Tinkong Ltd as at December 31, 2023, depicts the following:

Description	GH¢
Plant and Machinery – Cost	4,954,824
Less: Accumulated Depreciation	1,917,016
Net Book Value	3,037,808

On reviewing the accounts of the business, its auditor found that the records have been correctly recorded except for the following events:

On January 17, 2023, a contract was signed for the purchase of a machine for GH¢450,000 which is to be delivered on July 17, 2024. The company made an advance payment of GH¢180,000 on signing of the contract and the balance was to be paid on delivery of the machine. The advance payment was debited to the plant and machinery account.
The cost of a new plant amounting to GH¢1,080,000 was acquired on January 21, 2023, and debited to the plant and machinery account. However, the cost of installation amounting to GH¢120,000 was debited to the repairs account.

Depreciation is charged on a reducing balance method at 10% per annum. Depreciation on new assets commences in the month in which the asset is acquired.

Required:

Prepare the following accounts indicating the closing balances as at December 31, 2023: i) Plant and Machinery
ii) Accumulated Depreciation – Plant and Machinery

Answer

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Tags: Accumulated Depreciation, Depreciation, Disposal of assets, Non-current Assets, Revaluation
Level: Level 1

Topic: Non-current assets and depreciation
Series: MAR 2024

FA – Nov 2023 – L1 – Q1b – Non-current assets and depreciation

Prepare the non-current assets and accumulated depreciation accounts for Pramso Ltd, including depreciation, revaluation, and disposal adjustments.

Question

The following details were taken from the records of Pramso Ltd for the year ended 31 December 2022:

i) Tangible non-current assets (at cost) as at 1 January 2022 were:

Description	Amount (GHȼ)
Land and buildings (Land GHȼ400,000)	700,000
Motor vehicles	450,000
Machinery	310,000

ii) Accumulated depreciation as at 1 January 2022:

Description	Amount (GHȼ)
Land and buildings	85,000
Motor vehicles	210,000
Machinery	80,000

Pramso Ltd depreciates non-current assets as follows:

Buildings – 4% per annum on cost.
Motor Vehicles – 20% per annum using reducing balance method.
Machinery – 15% per annum on cost. Depreciation is charged for each month of ownership for all the assets.

iii) On 1 July 2022, land was revalued by an expert to GHȼ520,000.

iv) A Motor Vehicle purchased on 1 January 2020 for GHȼ22,000 was sold for GHȼ6,000 on 1 April 2022.

v) Machinery purchased on 1 July 2020 for GHȼ70,000 was sold on 1 January 2022 for GHȼ24,000.

vi) During the year the following assets were bought:

Machinery GHȼ24,000 on 1 July 2022.
Motor vehicles GHȼ40,000 on 1 October 2022.

Required:

Prepare the Non-Current Assets account and Accumulated Depreciation account showing the depreciation charge for the year. (10 marks)

Answer

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Tags: Accumulated Depreciation, Depreciation, Disposal of assets, Non-current Assets, Revaluation
Level: Level 1

Topic: Non-current assets and depreciation
Series: NOV 2023

FA – Nov 2021 – L1 – Q1 – Non-current assets and depreciation | The IASB’s Conceptual Framework

Explanation of duties of those charged with governance and preparation of motor vehicle-related accounts, including cost, depreciation, and disposal.

Question

a) Those charged with governance describe the role of persons entrusted with an entity’s supervision, control, and direction, thus ordinarily accountable for ensuring that the entity achieves its objectives.

Required:
Explain FOUR (4) duties and responsibilities of those charged with governance.
(10 marks)

b) On 1 January 2020, the following was extracted from the books of Gaga:

Item	Amount (GH¢)
Motor vehicles at cost	150,800
Accumulated depreciation on vehicles	95,700

During the year, the following occurred:

On 1 February 2020, Motor Vehicle C was traded in against a motor vehicle D.
Motor Vehicle C was purchased on 1 September 2016 for GHȼ 80,000.
Gaga wrote a cheque of GHȼ 40,000 for Motor Vehicle D. On the date of purchase, the list price of Motor Vehicle D was GHȼ 71,400.
Motor Vehicles are depreciated at 20% per annum on a straight-line basis from the month of purchase to the month of sale.

Required:
Prepare the following accounts for the year ended 31 December 2020.
i) Motor Vehicle at cost.
ii) Motor Vehicle accumulated depreciation.
iii) Disposal account for Motor Vehicle C.
(10 marks)

Answer

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Tags: Accumulated Depreciation, Depreciation, Disposal Account, Governance, Motor Vehicles
Level: Level 1

Topic: Non-current assets and depreciation, The IASB’s Conceptual Framework
Series: NOV 2021

FA – Nov 2016 – L1 – Q1 – Non-current assets and depreciation

Prepare ledger accounts for Machinery, Accumulated Depreciation, Motor Vehicles, and Disposal of Motor Vehicles for PQ Ltd.

Question

PQ Ltd had, among others, the following balances in the books at 1st January 2015:

Description	Debit (GH¢)	Credit (GH¢)
Machinery at cost	750,000
Machinery accumulated depreciation		301,000
Motor vehicles at cost	1,000,500
Motor vehicles accumulated depreciation		402,000

The following information relates to the non-current assets for the financial year ended 31st December 2015:

a) On 1st July 2015, PQ Ltd purchased machinery at a cost price of GH¢75,000, paying by cheque.
b) On 1st December 2015, PQ Ltd purchased machinery at a cost price of GH¢27,600, on credit from BD Machinery Ltd.
c) No disposals of machinery took place during the year ended 31st December 2015.
d) Machinery is depreciated at 20% per annum using the straight-line method, the rate being charged for each proportion of the year the machinery is owned. No allowance is made for any residual value. All machinery held at 31st December 2015 had been purchased within the previous four years.
e) On 30th June 2015, motor vehicles which originally cost GH¢40,000 and with a net book value of GH¢16,000 at the date of sale were sold at a profit of GH¢600. The disposal receipt was paid into the bank account.
f) No purchases of motor vehicles took place during the year ended 31st December 2015.
g) Motor vehicles are depreciated at 25% per annum using the straight-line method, the rate being charged for each proportion of the year the motor vehicles are owned. No allowance is made for any residual value. All motor vehicles held at 31st December 2015 had been purchased within the previous three years.

Required:
Prepare the following ledger accounts of PQ Ltd for the year ended 31st December 2015, where appropriate showing the balance carried down to the next financial year. Dates are not required.
a) Machinery. (4 marks)
b) Accumulated Depreciation of Machinery. (4 marks)
c) Motor vehicles. (4 marks)
d) Accumulated Depreciation of Motor vehicles. (4 marks)
e) Disposal of Motor Vehicles. (4 marks)
(Total: 20 marks)

Answer

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Tags: Accumulated Depreciation, Disposal Account, Machinery Account, Motor Vehicles Account
Level: Level 1

Topic: Non-current assets and depreciation
Series: NOV 2016

FA – Nov 2022 – L1 – SB – Q6b – Accounting for Property, Plant, and Equipment (PPE) in Accordance with IAS 16

This question requires calculating the gain or loss on disposal of a motor vehicle and preparing the necessary ledger accounts.

Question

Required:
i. Calculate the gain or loss on disposal of the old car. (2 Marks)
ii. Prepare the following ledger accounts in respect of the transactions:

Disposal of motor vehicle account (2 Marks)
Motor vehicles account (4 Marks)
Accumulated depreciation account (2 Marks)

Answer

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Tags: Accumulated Depreciation, Disposal, Gain or Loss, Ledger Accounts, Motor Vehicles
Level: Level 1

Topic: Accounting for Property, Plant, and Equipment (PPE) IAS 16
Series: NOV 2022

FA – Mar 2024 – L1 – Q1b – Non-current assets and depreciation

Prepare journal entries for the depreciation, revaluation, and disposal of non-current assets.

Question

The draft statement of financial position of Tinkong Ltd as at December 31, 2023, depicts the following:

Description	GH¢
Plant and Machinery – Cost	4,954,824
Less: Accumulated Depreciation	1,917,016
Net Book Value	3,037,808

On reviewing the accounts of the business, its auditor found that the records have been correctly recorded except for the following events:

On January 17, 2023, a contract was signed for the purchase of a machine for GH¢450,000 which is to be delivered on July 17, 2024. The company made an advance payment of GH¢180,000 on signing of the contract and the balance was to be paid on delivery of the machine. The advance payment was debited to the plant and machinery account.
The cost of a new plant amounting to GH¢1,080,000 was acquired on January 21, 2023, and debited to the plant and machinery account. However, the cost of installation amounting to GH¢120,000 was debited to the repairs account.

Depreciation is charged on a reducing balance method at 10% per annum. Depreciation on new assets commences in the month in which the asset is acquired.

Required:

Prepare the following accounts indicating the closing balances as at December 31, 2023: i) Plant and Machinery
ii) Accumulated Depreciation – Plant and Machinery

Answer

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Tags: Accumulated Depreciation, Depreciation, Disposal of assets, Non-current Assets, Revaluation
Level: Level 1

Topic: Non-current assets and depreciation
Series: MAR 2024

FA – Nov 2023 – L1 – Q1b – Non-current assets and depreciation

Prepare the non-current assets and accumulated depreciation accounts for Pramso Ltd, including depreciation, revaluation, and disposal adjustments.

Question

The following details were taken from the records of Pramso Ltd for the year ended 31 December 2022:

i) Tangible non-current assets (at cost) as at 1 January 2022 were:

Description	Amount (GHȼ)
Land and buildings (Land GHȼ400,000)	700,000
Motor vehicles	450,000
Machinery	310,000

ii) Accumulated depreciation as at 1 January 2022:

Description	Amount (GHȼ)
Land and buildings	85,000
Motor vehicles	210,000
Machinery	80,000

Pramso Ltd depreciates non-current assets as follows:

Buildings – 4% per annum on cost.
Motor Vehicles – 20% per annum using reducing balance method.
Machinery – 15% per annum on cost. Depreciation is charged for each month of ownership for all the assets.

iii) On 1 July 2022, land was revalued by an expert to GHȼ520,000.

iv) A Motor Vehicle purchased on 1 January 2020 for GHȼ22,000 was sold for GHȼ6,000 on 1 April 2022.

v) Machinery purchased on 1 July 2020 for GHȼ70,000 was sold on 1 January 2022 for GHȼ24,000.

vi) During the year the following assets were bought:

Machinery GHȼ24,000 on 1 July 2022.
Motor vehicles GHȼ40,000 on 1 October 2022.

Required:

Prepare the Non-Current Assets account and Accumulated Depreciation account showing the depreciation charge for the year. (10 marks)

Answer

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Tags: Accumulated Depreciation, Depreciation, Disposal of assets, Non-current Assets, Revaluation
Level: Level 1

Topic: Non-current assets and depreciation
Series: NOV 2023

FA – Nov 2021 – L1 – Q1 – Non-current assets and depreciation | The IASB’s Conceptual Framework

Explanation of duties of those charged with governance and preparation of motor vehicle-related accounts, including cost, depreciation, and disposal.

Question

Required:
Explain FOUR (4) duties and responsibilities of those charged with governance.
(10 marks)

b) On 1 January 2020, the following was extracted from the books of Gaga:

Item	Amount (GH¢)
Motor vehicles at cost	150,800
Accumulated depreciation on vehicles	95,700

During the year, the following occurred:

On 1 February 2020, Motor Vehicle C was traded in against a motor vehicle D.
Motor Vehicle C was purchased on 1 September 2016 for GHȼ 80,000.
Gaga wrote a cheque of GHȼ 40,000 for Motor Vehicle D. On the date of purchase, the list price of Motor Vehicle D was GHȼ 71,400.
Motor Vehicles are depreciated at 20% per annum on a straight-line basis from the month of purchase to the month of sale.

Answer

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Tags: Accumulated Depreciation, Depreciation, Disposal Account, Governance, Motor Vehicles
Level: Level 1

Topic: Non-current assets and depreciation, The IASB’s Conceptual Framework
Series: NOV 2021

FA – Nov 2016 – L1 – Q1 – Non-current assets and depreciation

Prepare ledger accounts for Machinery, Accumulated Depreciation, Motor Vehicles, and Disposal of Motor Vehicles for PQ Ltd.

Question

PQ Ltd had, among others, the following balances in the books at 1st January 2015:

Description	Debit (GH¢)	Credit (GH¢)
Machinery at cost	750,000
Machinery accumulated depreciation		301,000
Motor vehicles at cost	1,000,500
Motor vehicles accumulated depreciation		402,000

The following information relates to the non-current assets for the financial year ended 31st December 2015:

Answer

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Tags: Accumulated Depreciation, Disposal Account, Machinery Account, Motor Vehicles Account
Level: Level 1

Topic: Non-current assets and depreciation
Series: NOV 2016

Question Tag: Accumulated Depreciation

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FA – Nov 2022 – L1 – SB – Q6b – Accounting for Property, Plant, and Equipment (PPE) in Accordance with IAS 16

This question requires calculating the gain or loss on disposal of a motor vehicle and preparing the necessary ledger accounts.

FA – Mar 2024 – L1 – Q1b – Non-current assets and depreciation

Prepare journal entries for the depreciation, revaluation, and disposal of non-current assets.

FA – Nov 2023 – L1 – Q1b – Non-current assets and depreciation

Prepare the non-current assets and accumulated depreciation accounts for Pramso Ltd, including depreciation, revaluation, and disposal adjustments.

FA – Nov 2021 – L1 – Q1 – Non-current assets and depreciation | The IASB’s Conceptual Framework

Explanation of duties of those charged with governance and preparation of motor vehicle-related accounts, including cost, depreciation, and disposal.

FA – Nov 2016 – L1 – Q1 – Non-current assets and depreciation

Prepare ledger accounts for Machinery, Accumulated Depreciation, Motor Vehicles, and Disposal of Motor Vehicles for PQ Ltd.

FA – Nov 2022 – L1 – SB – Q6b – Accounting for Property, Plant, and Equipment (PPE) in Accordance with IAS 16

This question requires calculating the gain or loss on disposal of a motor vehicle and preparing the necessary ledger accounts.

FA – Mar 2024 – L1 – Q1b – Non-current assets and depreciation

Prepare journal entries for the depreciation, revaluation, and disposal of non-current assets.

FA – Nov 2023 – L1 – Q1b – Non-current assets and depreciation

Prepare the non-current assets and accumulated depreciation accounts for Pramso Ltd, including depreciation, revaluation, and disposal adjustments.

FA – Nov 2021 – L1 – Q1 – Non-current assets and depreciation | The IASB’s Conceptual Framework

Explanation of duties of those charged with governance and preparation of motor vehicle-related accounts, including cost, depreciation, and disposal.

FA – Nov 2016 – L1 – Q1 – Non-current assets and depreciation

Prepare ledger accounts for Machinery, Accumulated Depreciation, Motor Vehicles, and Disposal of Motor Vehicles for PQ Ltd.

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Question Tag: Accumulated Depreciation

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FA – Nov 2022 – L1 – SB – Q6b – Accounting for Property, Plant, and Equipment (PPE) in Accordance with IAS 16

This question requires calculating the gain or loss on disposal of a motor vehicle and preparing the necessary ledger accounts.

You're reporting an error for "FA – Nov 2022 – L1 – SB – Q6b – Accounting for Property, Plant, and Equipment (PPE) in Accordance with IAS 16"

FA – Mar 2024 – L1 – Q1b – Non-current assets and depreciation

Prepare journal entries for the depreciation, revaluation, and disposal of non-current assets.

You're reporting an error for "FA – Mar 2024 – L1 – Q1b – Non-current assets and depreciation"

FA – Nov 2023 – L1 – Q1b – Non-current assets and depreciation

Prepare the non-current assets and accumulated depreciation accounts for Pramso Ltd, including depreciation, revaluation, and disposal adjustments.

You're reporting an error for "FA – Nov 2023 – L1 – Q1b – Non-current assets and depreciation"

FA – Nov 2021 – L1 – Q1 – Non-current assets and depreciation | The IASB’s Conceptual Framework

Explanation of duties of those charged with governance and preparation of motor vehicle-related accounts, including cost, depreciation, and disposal.

You're reporting an error for "FA – Nov 2021 – L1 – Q1 – Non-current assets and depreciation | The IASB’s Conceptual Framework"

FA – Nov 2016 – L1 – Q1 – Non-current assets and depreciation

Prepare ledger accounts for Machinery, Accumulated Depreciation, Motor Vehicles, and Disposal of Motor Vehicles for PQ Ltd.

You're reporting an error for "FA – Nov 2016 – L1 – Q1 – Non-current assets and depreciation"

FA – Nov 2022 – L1 – SB – Q6b – Accounting for Property, Plant, and Equipment (PPE) in Accordance with IAS 16

This question requires calculating the gain or loss on disposal of a motor vehicle and preparing the necessary ledger accounts.

You're reporting an error for "FA – Nov 2022 – L1 – SB – Q6b – Accounting for Property, Plant, and Equipment (PPE) in Accordance with IAS 16"

FA – Mar 2024 – L1 – Q1b – Non-current assets and depreciation

Prepare journal entries for the depreciation, revaluation, and disposal of non-current assets.

You're reporting an error for "FA – Mar 2024 – L1 – Q1b – Non-current assets and depreciation"

FA – Nov 2023 – L1 – Q1b – Non-current assets and depreciation

Prepare the non-current assets and accumulated depreciation accounts for Pramso Ltd, including depreciation, revaluation, and disposal adjustments.

You're reporting an error for "FA – Nov 2023 – L1 – Q1b – Non-current assets and depreciation"

FA – Nov 2021 – L1 – Q1 – Non-current assets and depreciation | The IASB’s Conceptual Framework

Explanation of duties of those charged with governance and preparation of motor vehicle-related accounts, including cost, depreciation, and disposal.

You're reporting an error for "FA – Nov 2021 – L1 – Q1 – Non-current assets and depreciation | The IASB’s Conceptual Framework"

FA – Nov 2016 – L1 – Q1 – Non-current assets and depreciation

Prepare ledger accounts for Machinery, Accumulated Depreciation, Motor Vehicles, and Disposal of Motor Vehicles for PQ Ltd.

You're reporting an error for "FA – Nov 2016 – L1 – Q1 – Non-current assets and depreciation"

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