3ACC0803 FINANCIAL ACCOUTING II

TUTORIAL 5
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Question 1

Calculate depreciation using straight line method for (a) and (b) and, (b) required to list the
carrying value of the non-current asset.

(a) Non-current asset = RM20, 000. Estimated life = 10 years. No residual value.
(b) Non-current asset = RM60, 000 Estimated life = 5 years. Residual value = RM7, 000.

Question 2

A business which has an accounting year which runs from 1 January to 31 December
purchases a new non-current asset on 1 April 20x1, at cost of RM24, 000. The expected life
of the asset is 4 years, and its residual value is nil. What should be the depreciation charge
for 20x1?

Question 3
A machine costs RM80, 000. It will be kept for five years, and then sold for an estimated
figure of RM24, 000. Show the calculations of the figures for depreciation for each of the five
years and depreciation rate of 20 per cent using:

a) Straight line method

b) Reducing balance method

Question 4

A car costs RM12, 000. It will be kept for three years, and then sold for RM3, 000. Calculate
the depreciation for each year using:
(a) Reducing balance method, using a depreciation rate of 35%
(b) Straight line method.
 3ACC0803 FINANCIAL ACCOUTING II
TUTORIAL 5

Question 5

A company, which makes up its financial statements annually to 31 December, provides for
depreciation of its machinery at the rate of 15% per annum using the reducing balance method.
On 31 December 2011, the machinery consisted of the three items purchased as shown:

$
On 1 January 2009 Machine A 2,000
On 1 September 2010 Machine B 4,000
On 1 May 2011 Machine C 3,000

REQUIRED:
Calculate the depreciation provision for the year 2011. Showing clearly your calculations.

Question 6

A motor vehicle which cost Rm12, 000 was bought on credit from Trucks Ltd on 1 January
2009. Financial statements are prepared annually to 31 December and depreciation of vehicles
is provided at 25% annum under the reducing balance method.

REQUIRED:
Prepare the motor vehicle account and the accumulated provision for depreciation on motor
vehicles account for the first two years of the motor vehicle’s working life.

Question 7

A business purchased a machine on 1 July 20x1 at a cost of RM35, 000. The machine had an
estimated residual value of RM3, 000 and a life of eight years. The machine was sold for RM18,
600 on 31 December 20x4, the last day of the accounting year of the business. To make the
sale, the business had to incur dismantling costs and costs of transporting the machine to the
buyer’s premises. These amounted to RM1, 200.

REQUIRED:
The business uses the straight line method of depreciation. What was the profit or loss on
disposal of the machine?