2023 Papers Topical Revision Ch 11 NCA set 5

Name:…………………………….( ) Class:……………Date:………............ 2023PapersTopicalRevision:Non-currentAssetsset5 Q1TAMPINES TingExpressoperatesadeliverybusiness.Itsfinancialyearendson31December.On1 January2020,it boughta deliverytruckcosting$30000oncreditfromJamesTrading. REQUIRED(a) Statetwodifferencesbetweencapitalandrevenueexpenditure. [2] (b) Namethesourcedocumentusedtorecordthepurchaseon1January2020. [1] (c) StatetheaccountingtheoryappliedwhenTingExpressrecordthetransactionon1January2020usingasourcedocument. [1] On15June2021,TingExpressboughtanotherdeliverytruckcosting$32000.The businessdepreciatesits deliverytrucksat 20% per annumusingthereducing-balancemethod.Afullyeardepreciationischargedintheyearofpurchase. REQUIRED(d) Statetwocausesofdepreciation. [2] (e) Preparethejournalentriesto recordthedepreciationexpenseof thedeliverytrucksfortheyearsended31 December2020and2021.Narrationsarenotrequired. [4] (f) Prepareanextractofthestatementoffinancialperformancefortheyearended31December2021. [2] (g) Prepareanextractofthestatementoffinancialpositionasat31December2021.[3] [Total:15]

Q2SWISSCOTTAGE Jamie’sbookstore’sfinancialyearendson31Decembereveryyear. Jamieprovidedthefollowinginformationat1January2022. $Motorvehicles 150000Accumulateddepreciationofmotorvehicles 25000 On1March2022,thebusinesspurchasedanewmotorvehiclefor$12000oncreditfromZoomMotorsPteLtd. Thebusinessdepreciatesitsmotorvehiclesat 10%perannumusingthereducingbalancemethod.Afullyear’sdepreciationischargedintheyearofpurchase. REQUIRED (a) Calculatethedepreciationexpenseofmotorvehiclesfortheyearended31December2022.[2] (b) Preparethejournalentrytorecordthedepreciationofmotorvehiclesfortheyearended31December2022.Narrationisrequired.[3] (c) Statetwocausesofdepreciation.[2] DuringthemonthofJanuary2023,thebusinesspurchasedanequipmentandincurredothercostsrelatedtotheequipmentasshownbelow. $Costofequipment 10000Importtaxofequipment 1800Utilitiestooperatetheequipment 3500Installationcostofequipment 800Deliverycostofequipment 150 REQUIRED (d) Stateonedifferencebetweencapitalexpenditureandrevenueexpenditure.[2] (e) Calculatethetotalcostofthenewequipment.[2] (f) Stateandexplainanaccountingtheorythatisappliedtoclassifytheexpenditureascapitalandrevenueexpenditure.[2]

[Total: 13]A1TAMPINES (a)Anyoftwodifferencesbelow. [2] Capital expenditure Revenueexpenditure1. PurchasecostsandanyrelatedcostsincurredtobringNCAtoitsintendeduseorcoststoenhancetheNCA. 1. Coststooperate,repairandmaintaintheNCAinworkingconditions. 2. Providebenefitsformorethanoneyear. 2. Providebenefitswhichwillbeusedwithinoneyear.3. Recordedasanon-currentasset 3. Recordedasexpensesfortheperiod. (b) Invoice[1](c) Objectivitytheory[1](d) Anytwo:Usage;wearandtear;obsolescence;legallimit[2](e) JournalDate Particulars Debit Credit2020 ($) ($)Dec31 Depreciationexpense(20%x30000) 6,000 [1]Accumulateddepreciationofmotorvehicles 6,000OF[1] 2021Dec31 Depreciationexpense(20%x(30000-6000)+20%x32000) 11,200 [1] Accumulateddepreciationofmotorvehicles 11,200OF[1] (f) TingExpressStatementoffinancialperformancefortheyearended31December2021$ Less:Otherexpenses[1]Depreciationofmotorvehicles 11,200[1] (g) TingExpressStatementoffinancialpositionas31December2021$ $ $Cost A.D. NBVMotorvehicles 62,000[1] 17,200OF[1] 44,800OF[1]

A2SWISSCOTTAGE (a) Depreciationexpenseformotorvehicles= [1]150000 − 25000 + 12000( )×10%=$13700[1] (b) Journal Date Particulars Debit Credit 2022 $ $ Dec31 Depreciationexpenseofmotorvehicles 13700[1]OFAccumulateddepreciationofmotorvehicles 13700[1]OFDepreciationexpenseofmotorvehiclesfortheyearended31December2022.[1] (c) Causesofdepreciation:(2marks,any2) 1.Usage2.Wearandtear3.Obsolescence4.Legallimits(d) Capital expenditure RevenueexpenditureCosttobuyandbringthenon-currentassetstotheirintendeduseCoststoenhancethenon-currentassets Coststooperate,repairandmaintainthenon-currentassetsinworkingcondition Providebenefitsformorethanoneyear ProvidebenefitswhichwillbeusedwithinoneyearRecordedasnon-currentasset Recordedasexpense Anyonedifference.2marks (e) Totalcostofequipment= [1]10 000 + 1 800 + 800 + 150=$12750[1] (f) Accordingtomaterialitytheory[1],iftheamountspentonanon-currentassetisinsignificanttodecision-makingwhencomparedtothesizeoftheincome,profitassetsorequityofthebusiness,itwillbeclassifiedasrevenueexpenditure.[1]