2023 Papers Topical Revision Ch 11 NCA set 6

Name: ……………………………. ( ) Class: …………… Date: ………............ 2023 Papers Topical Revision: Non-current Assets set 6 Q 1 ST GABRIEL Chris operates a printing business. He commenced business on 1 August 2021. His business has the following transactions relating to office equipment. 2021 $ 2 August Chris brought his laptop into the business. 2 000 2022 24 March Bought a photocopier machine on credit from IPM. 50 000 26 March Issued a cheque to pay for installation of the photocopier machine bought. 3 500 31 March Issued another cheque for the yearly maintenance of the photocopier machine bought. 1 500 REQUIRED (a) Prepare the office equipment account for Chris’ business for the year ended 31 July 2022. Bring down the balance on 1 August 2022. [4] Chris also had the following balances for his motor vehicles on 1 August 2022. $ Motor vehicles 240 000 Accumulated depreciation of motor vehicles 75 000 On 1 November 2022, he bought a new motor vehicle for $80 000 by cheque. He depreciates his motor vehicle at 10% per annum on book value, using reducing-balance method. REQUIRED (b) Calculate the depreciation charged on motor vehicle for the year ended 31 July 2023. [3] (c) State the effect on profit for the year if straight-line method was used for depreciating motor vehicle for the year ended 31 July 2023. [3] (d) Explain how the matching theory is applied when providing depreciation for non-current assets. [2] [Total: 12]

Q 2 PRESBYTERIAN HS Ray owns a number of non-current assets. He depreciates them annually. REQUIRED (a) Using an accounting theory, explain why Ray depreciates his non -current assets annually. [2] Ray provided the following balances of his non-current assets on 1 January 2022. Cost $ Accumulated depreciation $ Fixtures and fittings 24 800 8 600 Motor vehicles 84 000 12 000 Ray depreciates his fixtures and fittings at 20% per annum on cost and 25% per annum on net book value for motor vehicles. On 1 October 2022, Ray bought new fittings costing $6 400 on credit from Nicholas. REQUIRED (b) Prepare the fixtures and fittings account for the year ended 31 December 2022. [2] (c) Calculate the depreciation on fixtures and fittings for the year ended 31 December 2022. [3] (d) Prepare journal entries to record depreciation on fixtures and fittings on 31 December 2022. Narration is not required. [2] (e) State the depreciation method adopted on motor vehicles. [1] Ray discovered that his bookkeeper had incorrectly depreciated motor vehicles at 25% per annum on cost for the year ended 31 December 2022. REQUIRED (f) Explain how this error affects the following: (i) profit for the year ended 31 December 2022; [2] (ii) net book va