CIE Accounting Paper-1: Specimen Questions 124 - 126 of 214

Passage

Mosses started a business on 1 December 2015 printing designs on Sarees and bought a printing machine for $32000.

He decided to depreciate the printing machine on the straight line basis over 10 years and expected the machine to have a scrap value of $7000 after that time.

Question number: 124 (3 of 5 Based on Passage) Show Passage

Short Answer Question▾

Write in Short

Calculate the Value of asset at the end of 2017 if Mosses adopted the straight line value method.

Explanation

$27000

The value of depreciation will not change under the written down value method. Hence

Cost of printing Machinery $32000

Less: Depreciation on 2016 $2500

________

29500

Less: Depreciation on 2017 $2500

________

$27000

Question number: 125 (4 of 5 Based on Passage) Show Passage

Short Answer Question▾

Write in Short

Calculate the depreciation charged in Mosses’s profit and loss account for the year ended 2016.

Explanation

$2500

Depreciation is charged as CostoffixedassetEstimatedscrapvalueNumberofyearsofexpectedlife

Depreciation=32000700010

=2500010

=$2500

Question number: 126 (5 of 5 Based on Passage) Show Passage

Short Answer Question▾

Write in Short

Mosses bought the new machine at the end of 2017 and sold the existing machine for scrap for $4000.

Prepare the Disposal of non-current (fixed) assets account in Mosses’s ledger account.

Disposal of machinery account

Explanation

Disposal of machinery account

Disposal of machinery account at the end of 2017

Table of Disposal machinery account at the end of 2017

Date

Particulars

$

Date

Particular

$

October 12

32000

October 15

Depreciation

5000

Bank

4000

Profit/loss account

23000

On sale of fixed asset an’ asset disposal account’ may be opened in order to ascertain the profit and loss incurred during the sale of old fixed assets. It is usually opened with the cost value of assets.

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