Topic: Depreciation Methods and Accounting for Disposals

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  • 1 Marks

FA – May 2012 – L1 – SA – Q35 – Depreciation Methods and Accounting for Disposals

Calculating the net book value of office equipment using the reducing balance method.

Chinko Limited bought office equipment on 1 January 2008 at a cost of N900,000. If depreciation is calculated at 20% on a reducing balance basis, the net book value of the asset at the end of year 2010 will be ……………………….

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  • 1 Marks

FA – May 2012 – L1 – SA – Q31 – Depreciation Methods and Accounting for Disposals

Calculating the depreciation using the sum-of-the-years’ digits method.

An asset has a useful life span of 5 years with no residual value. Using the sum-of-the-years’ digits method of depreciation, what proportion of the asset cost will have been written-off at the end of year 3?

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  • 1 Marks

FA – May 2013 – L1 – SA – Q26 – Depreciation Methods and Accounting for Disposals

This question involves calculating the profit or loss on the disposal of a non-current asset.

A non-current asset with an original cost of N500,000 and accumulated depreciation of N400,000 was disposed of for N80,000. Calculate the profit or loss on disposal.

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  • 1 Marks

FA – May 2013 – L1 – SA – Q5 – Depreciation Methods and Accounting for Disposals

This question tests the understanding of depreciation charged on non-current assets.

Depreciation charged on non-current assets is known to be:

A. The amount spent to buy the non-current asset
B. The salvage value of a non-current asset
C. The part of the cost of non-current asset consumed during its period of use
D. The amount of money spent in replacing non-current assets
E. The part of the cost of non-current asset reserved to be consumed in future periods

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  • 20 Marks

FA – Nov 2015 – L1 – SB – Q3 – Depreciation Methods and Accounting for Disposals

Calculate depreciation rate and amounts, then post transactions to relevant ledger accounts.

a. On January 1, 2013, Ajanaku Enterprises bought a motor vehicle for N1,850,000 with an estimated life span of four years and a residual value of N50,000.

i. Determine the depreciation rate, using the reducing balance method. (2 Marks)
ii. Using the rate of depreciation derived in (i) above, calculate the amount of depreciation for the years 2013 and 2014 respectively. Also, disclose the carrying amount of the asset at the end of December 31, 2014. (3 Marks)

b. The following transactions were recorded in the books of Lexus Enterprises for the three months ended March 31, 2014.

Date Description
Jan. 1 Commenced business by introducing N250,000 into a bank.
Jan. 5 Bought N50,000 furniture from Adam Enterprises on credit.
Jan. 15 Bought office stationery for N1,000 paying by cheque.
Jan. 28 Bought goods for resale worth N25,000 paying by cheque.
Feb. 2 Paid Adam Enterprises a cheque of N35,000.
Feb. 3 Rent of N30,000 for business premises was paid by cheque.
Mar. 5 Bought goods on credit from Jay Enterprises for N35,000.
Mar. 8 Bought office stationery for N500 paying by cheque.

Required:
i. Post the above transactions in the relevant ledger accounts and balance the accounts. (15 Marks)

(Total 20 Marks)

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  • 1 Marks

FA – Nov 2015 – L1 – SA – Q11 – Depreciation Methods and Accounting for Disposals

This question identifies the appropriate method for depreciating loose tools in a business entity.

In accordance with normal accounting practice, the appropriate method for depreciating Loose Tools in the books of a business entity is:
A. Sum of the years digit method
B. Reducing balance method
C. Straight line method
D. Revaluation method
E. Annuity method

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  • 10 Marks

FA – May 2018 – L1 – SB – Q4c – Depreciation Methods

Prepares ledger accounts for plant and machinery, office equipment, and bank transactions for Jingolo.

Mr. Jingolo is a trader who prepares accounts to December 31 each year. The following transactions with regard to non-current assets have taken place:

  • January 3, 2015: Purchased one office equipment for N2,000,000.
  • July 5, 2016: Purchased plant and machinery costing N50,000,000.
  • December 1, 2016: Purchased plant and machinery for N20,000,000.
  • December 15, 2017: Bought office equipment for N1,000,000.
  • Bank balance as at January 1, 2015 was N100,000,000.

Mr. Jingolo maintains his non-current assets at cost and keeps a separate ledger for each type of non-current asset. All assets are purchased and are paid for immediately.

Required:
i. Prepare plant and machinery account. (1 Mark)
ii. Prepare office equipment account. (3 Marks)
iii. Prepare bank account. (6 Marks)

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  • 7.5 Marks

FA – May 2018 – L1 – SB – Q4b – Depreciation Methods

Lists factors that should be taken into account when determining depreciation on a non-current asset.

List FIVE factors which should be taken into account in arriving at the depreciation charged on a non-current asset.

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  • 2.5 Marks

FA – May 2018 – L1 – SB – Q4a – Depreciation Methods

Defines depreciation and outlines factors for determining depreciation on non-current assets.

Define “depreciation.”

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  • 8 Marks

FA – May 2022 – L1 – SB – Q2c – Depreciation Methods and Accounting for Disposals

Calculate depreciation for a motor vehicle using both the straight-line and reducing balance methods.

On January 1, 2017, Jos Limited acquired a motor vehicle for ₦4,500,000. The estimated useful life of the motor vehicle is four years, and its residual value at the end of the useful life is ₦300,000.

Required:
Calculate the depreciation charged for the first two years using:
(i) The straight-line method (4 Marks)
(ii) The reducing balance method (4 Marks)

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  • 1 Marks

FA – May 2012 – L1 – SA – Q35 – Depreciation Methods and Accounting for Disposals

Calculating the net book value of office equipment using the reducing balance method.

Chinko Limited bought office equipment on 1 January 2008 at a cost of N900,000. If depreciation is calculated at 20% on a reducing balance basis, the net book value of the asset at the end of year 2010 will be ……………………….

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  • 1 Marks

FA – May 2012 – L1 – SA – Q31 – Depreciation Methods and Accounting for Disposals

Calculating the depreciation using the sum-of-the-years’ digits method.

An asset has a useful life span of 5 years with no residual value. Using the sum-of-the-years’ digits method of depreciation, what proportion of the asset cost will have been written-off at the end of year 3?

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  • 1 Marks

FA – May 2013 – L1 – SA – Q26 – Depreciation Methods and Accounting for Disposals

This question involves calculating the profit or loss on the disposal of a non-current asset.

A non-current asset with an original cost of N500,000 and accumulated depreciation of N400,000 was disposed of for N80,000. Calculate the profit or loss on disposal.

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  • 1 Marks

FA – May 2013 – L1 – SA – Q5 – Depreciation Methods and Accounting for Disposals

This question tests the understanding of depreciation charged on non-current assets.

Depreciation charged on non-current assets is known to be:

A. The amount spent to buy the non-current asset
B. The salvage value of a non-current asset
C. The part of the cost of non-current asset consumed during its period of use
D. The amount of money spent in replacing non-current assets
E. The part of the cost of non-current asset reserved to be consumed in future periods

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  • 20 Marks

FA – Nov 2015 – L1 – SB – Q3 – Depreciation Methods and Accounting for Disposals

Calculate depreciation rate and amounts, then post transactions to relevant ledger accounts.

a. On January 1, 2013, Ajanaku Enterprises bought a motor vehicle for N1,850,000 with an estimated life span of four years and a residual value of N50,000.

i. Determine the depreciation rate, using the reducing balance method. (2 Marks)
ii. Using the rate of depreciation derived in (i) above, calculate the amount of depreciation for the years 2013 and 2014 respectively. Also, disclose the carrying amount of the asset at the end of December 31, 2014. (3 Marks)

b. The following transactions were recorded in the books of Lexus Enterprises for the three months ended March 31, 2014.

Date Description
Jan. 1 Commenced business by introducing N250,000 into a bank.
Jan. 5 Bought N50,000 furniture from Adam Enterprises on credit.
Jan. 15 Bought office stationery for N1,000 paying by cheque.
Jan. 28 Bought goods for resale worth N25,000 paying by cheque.
Feb. 2 Paid Adam Enterprises a cheque of N35,000.
Feb. 3 Rent of N30,000 for business premises was paid by cheque.
Mar. 5 Bought goods on credit from Jay Enterprises for N35,000.
Mar. 8 Bought office stationery for N500 paying by cheque.

Required:
i. Post the above transactions in the relevant ledger accounts and balance the accounts. (15 Marks)

(Total 20 Marks)

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  • 1 Marks

FA – Nov 2015 – L1 – SA – Q11 – Depreciation Methods and Accounting for Disposals

This question identifies the appropriate method for depreciating loose tools in a business entity.

In accordance with normal accounting practice, the appropriate method for depreciating Loose Tools in the books of a business entity is:
A. Sum of the years digit method
B. Reducing balance method
C. Straight line method
D. Revaluation method
E. Annuity method

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  • 10 Marks

FA – May 2018 – L1 – SB – Q4c – Depreciation Methods

Prepares ledger accounts for plant and machinery, office equipment, and bank transactions for Jingolo.

Mr. Jingolo is a trader who prepares accounts to December 31 each year. The following transactions with regard to non-current assets have taken place:

  • January 3, 2015: Purchased one office equipment for N2,000,000.
  • July 5, 2016: Purchased plant and machinery costing N50,000,000.
  • December 1, 2016: Purchased plant and machinery for N20,000,000.
  • December 15, 2017: Bought office equipment for N1,000,000.
  • Bank balance as at January 1, 2015 was N100,000,000.

Mr. Jingolo maintains his non-current assets at cost and keeps a separate ledger for each type of non-current asset. All assets are purchased and are paid for immediately.

Required:
i. Prepare plant and machinery account. (1 Mark)
ii. Prepare office equipment account. (3 Marks)
iii. Prepare bank account. (6 Marks)

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  • 7.5 Marks

FA – May 2018 – L1 – SB – Q4b – Depreciation Methods

Lists factors that should be taken into account when determining depreciation on a non-current asset.

List FIVE factors which should be taken into account in arriving at the depreciation charged on a non-current asset.

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You're reporting an error for "FA – May 2018 – L1 – SB – Q4b – Depreciation Methods"

  • 2.5 Marks

FA – May 2018 – L1 – SB – Q4a – Depreciation Methods

Defines depreciation and outlines factors for determining depreciation on non-current assets.

Define “depreciation.”

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  • 8 Marks

FA – May 2022 – L1 – SB – Q2c – Depreciation Methods and Accounting for Disposals

Calculate depreciation for a motor vehicle using both the straight-line and reducing balance methods.

On January 1, 2017, Jos Limited acquired a motor vehicle for ₦4,500,000. The estimated useful life of the motor vehicle is four years, and its residual value at the end of the useful life is ₦300,000.

Required:
Calculate the depreciation charged for the first two years using:
(i) The straight-line method (4 Marks)
(ii) The reducing balance method (4 Marks)

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