KOLEJ SYNERGY

NO 32, 34 JALAN PERAI JAYA 4,

BANDAR PERAI JAYA,
13600 PULAU PINANG.

PENILAIAN PENGETAHUAN
(KNOWLEDGE ASSESSMENT)

KOD UNIT KOMPETENSI /

FB-100-4:2012-C01
COMPETENCY UNIT CODE

TAJUK UNIT KOMPETENSI /

PROPERTY, PLANT AND EQUIPMENT(PPE)
COMPETENCY UNIT TITLE

NO.KOD / CODE NO. FB-100-4:2012- C01/KA(3/3)

NAMA COLAN / CANDIDATE’S

NAME

NO. KAD PENGENALAN / NRIC

NUMBER

MASA / TIME 10.00AM – 11.30AM (1 HOUR 30 MINUTES)

TARIKH / DATE

KEPUTUSAN PENILAIAN / ASSESSMENT RESULT

MARKAH / SCORE: % TERAMPIL / BELUM TERAMPIL

COMPETENT / NOT COMPETENT

ULASAN PEGAWAI PENILAI / ASSESSOR COMMENT :

Tarikh / Date :

Tandatangan Pegawai
Assessor’s Signature
Nama / Name :
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ARAHAN KEPADA COLAN / INSTRUCTION TO CANDIDATE :

1. Write down the name and numbers of your ID card in the space provided.

2. Candidates are not allowed to open the paper until allowed.

3. Please answer all questions.

4. Not allowed to bring any notes and reference materials except allowed.

5. Candidates are prohibited copying during evaluation.

6. Prohibited brings out the question paper.

THIS KNOWLEDGE ASSESSMENT CONTAINS 10 PRINTED PAGE

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SECTION A: MULTIPLE CHOICE QUESTION

1. The number of production of similar units expected to be obtained from the use of an asset
by an enterprise is called as:
A. Unit life
B. Useful life
C. Expected life
D. Production life

2. Which of the following expenses is not included in the aquisition cost of a plant and
equipment?
A. Installation costs
B. Cost of site preparation
C. Delivery and handling charges
D. Financing cost incurred subsequent to the period after plant and equipment is put to
use

3. If a concern proposes to discontinue its business from March 2011 and decides to
disposes of all its assets within a period of 4 months, the Balance Sheet as on 31 March
2011 should indicate the assets at their
A. Historical cost
B. Written down value
C. Cost price less depreciation
D. Cost price or market value, whichever is lower

4. Under the diminshing balance method depreciation is calcuated on__________.

A. Scrap value
B. Market value
C. Original value
D. Written down value

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5. The permanent, continuing and gradual shrinkage in the book value of a fixed asset is
called__________.
A. Reduction
B. Appreciation
C. Depreciation
D. Computation

6. In which of the following methods, is the cost of the asset written off in equal proportion,
during its useful economic life?
A. Straight line method
B. Units of production method
C. Written down value method
D. Sum of the year digits method

7. The amount of depreciation charged on machinery will be debited to__________.

A. Bank account
B. Cash account
C. Machinery account
D. Depreciation account

8. If the asset is sold, the provision for depreciation relating to the asset sold is transferred
to__________.
A. Assets account
B. Liability account
C. Trading account
D. Disposal account

9. Written down value method is also called__________.

A. Annuity method
B. Fixed instalment method
C. Depreciation fund method
D. Diminishing balance method

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10. A motor vehicle at the cost of RM 30,000 with depreciation expenses of RM 5,000 per year
can be used for__________years.
A. 3
B. 4
C. 5
D. 6

11. Amit purchased a machine on 1 January 2011 for RM 120,000. Installation expenses were
RM 10,000. Residual value after 5 years. On 1 July 2011, expenses for repairs were
incurred to the extent of RM 2,000. Depreciation is provided under straight line method.
Depreciation rate is 10%. What is the amount of the first year depreciation?
A. RM 13,000
B. RM 17,000
C. RM 21,000
D. RM 25,000

12. A motor vehicle purchase on 1 January 2014 at the cost of RM 126,000 is expected to
have a useful life of 6 years. Calculate the motor vehicle depreciation for the year 2017
under sum of years digit method will be
A. RM 6,000
B. RM 12,000
C. RM 18,000
D. RM 24,000

13. A business costing RM 100,000 was purchased by a company to manufacture a special

product. Lts useful life is estimated to be 5 years and scarp value at RM 10,000. The
production plan for the next 5 years using the above machine is as follows:

Year 1 5,000 units

Year 2 10,000 units
Year 3 12,000 units
Year 4 20,000 units
Year 5 25,000 units

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The depreciation expenditure for the 1st year under units of production method will be
A. RM 6,250
B. RM 12,500
C. RM 15,000
D. RM 25,000

14. In the books of Lily Ltd the machinery accountshows a debit balance of RM 60,000 as on 1
April 2010. The machinery was sold on 30 September 2011 for RM 30,000. The company
charge depreciation rate is 20% on diminishing balance method. What is the depreciation
amount on 2010.
A. RM 6,000
B. RM 9,000
C. RM 4,800
D. RM 12,000

15. A machine which was bought for RM 180,000 on 30 April 2015. The residual value was
RM 5,000 and depreciation rate was 25%. Depreciation is to be charged under the
reducing balance method on month to month basis. Claculate the depreciation at 31
December 2015.
A. RM 15,000
B. RM 18,000
C. RM 19,000
D. RM 30,000

16. On 1 January 2015, a company which prepares financial statements to 31 December each
year buys an item of equipment for RM 20,000. Useful life is estimated to be six years and
residual value is RM 1,500. The company uses the diminishing balance method of
depreciation at a rate of 35% per annum. What is the depreciation of this item for the year
to 31 December 2016
A. RM 3,083
B. RM 4,209
C. RM 4,550
D. RM 7,000

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17. A purchase of equipment for RM 18,000 also involved freight charges of RM 500 and
installation cost of RM 2,500. The estimated salvage value and useful life are RM 2,000
and 4 years, respectively. Under the straight line method,annual depreciation expense will
be
A. RM 4,125
B. RM 4,500
C. RM 4,625
D. RM 4,750

18. Kakadu Ltd purchased land for RM 80,000. The company also paid RM 12,000 in accrued
taxes on the property, incurred RM 5,000 to remove an old building and received RM 2,000
from the sakvage of the old building. The land will be recorded at
A. RM 80,000
B. RM 83,000
C. RM 92,000
D. RM 95,000

19. A monthly depreciation expense of RM 500 is recorded on a truck that was purchased for
RM 27,000 and has a RM 3,000 estimated salvage value. The annual depreciation rate is
A. 25%
B. 27%
C. 30%
D. 33%

20. A company purchase a machine on 1 January 2013 for RM 12,000. It has a working life of
8 years. Depreciation is calculated using the straight line method. What is the book value
of machine at 31 December 2013?
A. RM 10,000
B. RM 10,500
C. RM 10,750
D. RM 12,000
(20 MARKS)

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SECTION B: SHORT ESSAY

Explain the term and Give an examples of the each term below:

1. What is the definition of property, plant, and equipment

_________________________________________________________________

_________________________________________________________________

2. What does property plant and equipment include?

_________________________________________________________________

_________________________________________________________________

3. What is scrap value?

_________________________________________________________________

_________________________________________________________________

4. Explain book value and exchange value?

_________________________________________________________________

_________________________________________________________________

5. What are the differences between depreciation and amortization?

_________________________________________________________________

_________________________________________________________________

(10 MARKS)

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SECTION C: ESSAY

1. Explain the FOUR methods to calculate depreciation expense in PPE.

(20 MARKS)

2. Explain the differences between depreciation and accumulated depreciation of PPE.

(10 MARKS)

3. Explain the PPE Schedule.

(10 MARKS)

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KOLEJ SYNERGY
NO 32, 34 JALAN PERAI JAYA 4,
BANDAR PERAI JAYA,
13600 PULAU PINANG.

PENILAIAN PENGETAHUAN
(KNOWLEDGE ASSESSMENT)

COMPETENCY UNIT CODE FB-100-4:2012- C01

COMPETENCY UNIT TITLE

PROPERTY, PLANT AND EQUIPMENT(PPE)

CODE NO. FB-100-4:2012- C01/KA(1/1)

ASSESSMENT RESULT

SCORE: % COMPETENT/ NOT COMPETENT

SECTION / QUESTION NO. MARK OBTAINED

A / 20

B / 10

C / 40

/ 70 (100%) =
TOTAL
/ 100 (15%) =

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ANSWER
SECTION A: MULTIPLE QUESTION (20 MARKS)

1. B 11. A
2. D 12. C
3. B 13. A
4. D 14. D
5. C 15. D
6. A 16. C
7. D 17. D
8. D 18. D
9. D 19. C
10. D 20. B

SECTION B : SHORT ESSAY (20 MARKS)

1. What is the definition of property, plan, and equipment?

The PPE account is important for the operations of a firm because it gives the company
the resources necessary to produce its products. The value of PPE depends on its age
and original cost. All fixed assets are recorded at their purchase price and listed on the
balance sheet at their historical cost.

2. What does property plant and equipment include?

PPE are included land, buildings, machinery, equipment, motor vehicle, furniture,
fixtures,etc which are used in the business.

3. What is scrap value?

The scrap value might be used instead of the more common terms od salvage value,
disposal value, or residual value when calculating the depreciation of an asset used in the
business. Scrap value is the expected or estimated value of the asset at the end of its
useful life.

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4. Explain book value and exchange value?

Book value is a net value of the asset after considering an accumulated depreciation,
whereas exchange value is the value of the asset involved in exchange with the other
asset.

5. What are the differences between depreciation and amortization?

Depreciation allocates the cost of a tangible asset over its useful life. Amortization reduces
the value of intangible assets over its useful life.

SECTION C: ESSAY (40 MARKS)

1. Explain the four methods to calculate depreciation expense in PPE.

a. Straight line methods

This method is the simplest and most often used technique, in which the company
estimates the "salvage value" of the asset after the length of time over which it is
depreciated, and assumes the drop in the asset's value is in equal, constant yearly
increments over that amount of time. The salvage value is an estimate of the value
of the asset at the time it will be sold or disposed of; it may be zero. If the vehicles
were to be sold and the sales price exceeded the depreciated value (net book
value) then the excess depreciation would be considered as income by the tax
office (capital gains). If the sales price is less than the book value, the resulting
capital loss is tax deductible

b. Declining balance methods

This method is a type of accelerated depreciation, because it recognizes a higher
depreciation cost earlier in an asset's lifetime. This may be a more realistic reflection
of an asset's actual resale value, as well as the expected benefit from the use of the
asset: many assets are most useful when they are new. In the U.S., a form of
double declining-balance depreciation, MACRS, is used for tax purposes and is
based on time. In declining-balance depreciation, each period's depreciation is
based on the previous year's net book value, the estimated useful life, and a factor.
The factor is commonly two; this is known as double declining-balance.

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c. Units of production methods

This method is usually applied to machinery used in production. Asset depreciation
is calculated based on certain measures such as activity, usage, operating hours,
total travel mileage and units or parts produced.depreciation expense is different for
rach year based on the output produced.

d. Sum of years digits methods

This method is a hiatorical depreciation method that resilts in a more accelerated
write off than straight line, but less than declining balance or later methods. Salvage
value is counted in the method. There are no property classes of later methods.

2. Explain the differences between depreciation and accumulated depreciation od PPE.

Depreciation expense is the amount of depreciation that is reported on the income
statement. In other words, it is the amount that pertains only to the period of time indicated
in the heading of the income statement. For accounting purposes, depreciation expense
does not represent a cash transaction, but it shows how much of an asset's value the
business has used over a period. For example, if a company buys a piece of equipment for
RM50,000, it can either write the entire cost of the asset off in year one or write the value
of the asset off over the assets 10-year life. This is why business owners like depreciation.
Most business owners prefer to expense only a portion of the cost, which artificially boosts
net income. In addition, the company can scrap the equipment for RM10,000, which
means it has a salvage value of RM10,000. Using these variables, the analyst calculates
depreciation expense as the difference between the cost of the asset and the salvage
value, divided by the useful life of the asset. The calculation in this example is (RM50,000 -
RM10,000) / 10, which is RM4,000

Accumulated depreciation is the total amount of a plant asset's cost that has been
allocated to depreciation expense since the asset was put into service. Accumulated
depreciation is associated with constructed assets such as buildings, machinery, office
equipment, furniture, fixtures, vehicles, etc. Accumulated Depreciation is also the title of
the contra asset account which is credited when Depreciation Expense is recorded each
accounting period.The amount of accumulated depreciation is used to determine a plant
asset's book value (or carrying value). For example, a delivery truck having a cost of

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RM50,000 and accumulated depreciation of RM31,000 will have a book value of

RM19,000. (It is important to note that an asset's book value does not indicate the asset's
market value since depreciation is merely an allocation technique.)The accumulated
depreciation of each plant asset cannot exceed the asset's cost. If an asset remains in use
after its cost has been fully depreciated, the asset's cost and its accumulated depreciation
will remain in the general ledger accounts and the depreciation expense stops. When the
asset is disposed (sold, retired, etc.) the asset's cost and accumulated depreciation are
removed from the accounts.

3. Explain function of PPE Schedule.

The easiest way to keep track of fixed capital assets is with a schedule, such as the one
shown below. This is the type of analysis a financial analyst would prepare and maintain
for a company in order to prepare complete financial statements.

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