Non-Current Assets Pei Hwa (Collated)

PEI HWA SECONDARY SCHOOL Principles of Accounts Secondary Four Name: ____________________________ ( ) Date:___________ Class: __________ Teaching Group Name: ______________________ __________________________________________________________________________ Question 1 (10 Marks) Jermaine Tools bought two pieces of equipment on 1 January 2020 for $50 000 each by cheque. The following accumulated depreciation of equipment account relates to these two pieces of equipment. The financial year ends on 31 December. Accumulated depreciation of equipment account Date Particulars Debit Credit Balance 2020 $ $ $ Dec 31 Depreciation of equipment 15 000 15 000 Cr 2021 Jan 1 Balance b/d 15 000 Cr Dec 31 Depreciation of equipment 12 750 27 750 Cr 2022 Jan 1 Balance b/d 27 750 Cr REQUIRED (a) State one cause of depreciation. [1] (b) State the method used by Jermaine Tools to depreciate its equipment. [1] (c) Calculate the net book value of the equipment as at 31 December 2022. [3] On 1 February 2022, the business purchased a new equipment on credit from JL Industrial. The following relates to the new equipment purchased. $ Purchase price of equipment 40 000 Installation cost of equipment 5 250 Delivery fee for transportation of equipment 1 720 Utilities to operate the equipment 650 Salary of equipment operator 3 500 REQUIRED (d) Explain the meaning of capital expenditure. [2] (e) Calculate the cost of the equipment purchased on 1 February 2022. [3] [Total: 10 Marks] Paya Lebar Methodist Girls School 2023 4N Prelim Non-Current Assets Quiz 2 10

SOLUTIONS Question 1 PAYA LEBAR METHODIST GS Marks (a) Wear and tear/obsolesence/usage/legal limits 1 any one (b) Reducing balance method 1 (c) Net book value = 50000x2 [1] - (15000[1]+12750[1]) 3 =$72250 (d) Capital expenditure is 2 - Cost to buy [1] and bring non-current assets to their intended use [1]; or - Costs to enhance non-current assets [1]; or - Provide benefits for more than 1 year [1]. Any two points (e) Cost of equipment = $40000[1] + $5250[1] +$1720[1] 3 '=$46970

PEI HWA SECONDARY SCHOOL Principles of Accounts Secondary Four Name: ____________________________ ( ) Date:___________ Class: __________ Teaching Group Name: ______________________ __________________________________________________________________________ Question 1 (16 Marks) On 1 April 2023, Dan Ser Transport Servic