# 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

### Write in Short

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

 Cost \$ Provision for Depreciation \$ Net book value \$ Fixed assets Machinery

### Explanation

Mosses Balance Sheet as on 2017 (extract)

 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.

## Question number: 123 (2 of 5 Based on Passage) Show Passage

### 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

### 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