# CIE Accounting Paper-1: Specimen Questions 80 - 82 of 214

## Passage

Aieno bought fixed asset at a cost of \$50000 on 1st Aprils 2014. Calculate its net book value as on 31st March 2016 if it is depreciated:

## Question number: 80 (1 of 4 Based on Passage) Show Passage

### Write in Short

At 20 % per annum on the written down value method:

### Explanation

\$32000

The depreciation is charged on the reduced value of the asset for every year. The written down value method is also known as diminishing value method.

Depreciation on 31st March 2015 =

Depreciation on 31st March 2016 =

Net Book Value as on 31st March 2016 =

## Question number: 81 (2 of 4 Based on Passage) Show Passage

### Write in Short

Which method of depreciation is used for live –stock and state your reason also

### Explanation

Revaluation method.

The revaluation method is suitable for asset like live – stock because which call for special consideration and no other method are suitable for secure satisfactory results. It is very simple to understand and use. The difference between the asset value at the beginning and at the end is depreciated and charged to profit and loss account. If the value of asset at the end of year are higher than the beginning then the difference is ignored.

## Question number: 82 (3 of 4 Based on Passage) Show Passage

### Write in Short

Identify where the following items will appear in the trial balance and the effect in balance sheet.

 Account Debit or credit balance in trial balance Balance sheet Rent Outstanding Capital Drawings Commission paid Freehold premises

Table Title: Balance in trial balance and Balance sheet

### Explanation

 Account Debit or credit balance in trial balance Balance sheet Rent Outstanding Debit Current assets Capital Credit Non – current liabilities Drawings Debit Capital Commission paid Debit Current assets Freehold premises Debit Non-current assets

Rent outstanding, drawings, commission paid and freehold premises are appear in the debit balance of the trial balance. Capital will appear in the credit side of the trial balance. Freehold premises is fixed asset, rent outstanding and commission paid are current assets, and Drawing will be deducted from the capital account in the liability side.

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