CIE Accounting Paper-1: Specimen Questions with Answers 122 - 124 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: 122 (1 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

Less: Depreciation on 2016 $2500

________

29500

Less: Depreciation on 2017 $2500

________

$27000

Question number: 123 (2 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

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

Short Answer Question▾

Write in Short

Complete the following extract from Mosses’s balance sheet at as on 2017.

Extract of Mosses balance sheet as on 2017

Shows table in Extract of Mosses balance sheet as on 2017

Cost $

Provision for Depreciation $

Net book value $

Fixed assets

Machinery

Explanation

Mosses Balance Sheet as on 2017 (extract)

Extract of Mosses balance sheet as on 2017.

Shows table in Extract of Mosses balance sheet as on 2017

Cost $

Provision for Depreciation $

Net book value $

Fixed assets

Machinery

32000

5000

27000

The fixed assets will not disclose a true and fair view of the firm, if depreciation is not provided by the firm. The fixed assets will show a true value only when the depreciation is provided at the end of every year.