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Movement Schedule of Non-Current Assets
Movement Schedule of Non-Current Assets
Introduction
This topic is aimed at equipping the learners with skills to prepare Assets movement schedule for
non-current assets
Learning outcomes
At the end of the lesson the learners should be able to:
1. Explain the meaning of Assets movement schedule for non-current assets
2. Prepare Assets movement schedule for non-current assets
INTRODUCTION
MEANING
This is a list showing changes in the fixed assets of an entry over a given period of time and it
incorporates the following aspects of the assets;-
i) The actual acquisition of assets, (cost)
ii) The disposal or write off of assets
iii) Accumulated depreciation of the asset
iv) Depreciation for the year
v) The net book value of the asset
Schedule of assets movement statement gives a clear picture of the fixed assts changes at a glance.
Illustration 1
At 1 July 2008 the fixed asset balance of true Ltd comprised the following;
Original cost Depreciation Net
Shs shs shs
Freehold land & building 296,000 - 296,000
Plant & equipment 395,000 238,100 157,100
Vehicles 32,000 18,400 13,600
The straight line rates of depreciation based on cost, used to that data were 10% pa for plant and
equipment, and 12.5% for vehicles. It is the company’s practice to make a full year’s charge on
new items in the year if purchase. The following additional information is relevant to the
calculation of depreciation for the year to 30th June 2009.
i) An item of equipment bought in September 1984 for shs 84,000 is now recognized to have
full useful life of at least 20 years.
ii) It has been decided to charge depreciation on the freehold buildings at 2% pa. The buildings
represent shs 180,000 of the shs 296,000 shown above and were all completed in August
1995.
iii) A vehicle purchased in January 2005 for shs 4,000 was traded in at a value of shs 1,800 in
part exchange for a new vehicle costing shs 6,400
iv) Included in the equipment is an item which originally cost shs 72,000 and which is already
fully depreciated but not expected to last for very much longer. Otherwise all items of
equipment are less than 10 years old and all vehicles less than 8 years old.
Required;
a) Prepare a schedule of fixed asset movements and balance suitable for inclusion in the
company’s published accounts for the year to 30th June 2009. Include a clear indication of
the amount to be charged against the year’s profits and the balances to be shown in the
balance sheet.
Illustration 2
a) Explain why
i) It is considered necessary to provide for depreciation on fixed assets (3marks)
ii) Some business enterprise do not provide depreciation in freehold land and buildings
(2 marks)
b) On 1 July 1996 Wako enterprises had the following categories of assets;
Freehold land Plant and Motor Furniture and
and buildings equipment Vehicles fittings
Shs Shs Shs Shs
Cost 825,000 1,312,500 970,500 187,500
Accumulated depr ___________ 507,300 316,500 48,000
Net book value 825,000 805,200 654,000 139,500
Additional information
i) An item of equipment bought on December 1990 for shs 157,500 is now recognized to
have a useful life at least 20 years
ii) Freehold land and buildings were professionally revalued during the year at shs
1,462,500.
iii) A motor vehicle bought in May 1993 for shs 127,500 was traded it at a value of 66,000
in part exchange for new vehicle costing 210,000
iv) Included with furniture and fittings is an item which had cost shs 22,500 and which is
already fully depreciated and not expected to last much longer.
Required;
i) A schedule of fixed assets showing the balances at the end of the year (10 marks)
ii) Items that must be shown in the profit and loss account
SOLUTION
i) Why depreciation is provided
a) Match the ‘cost’ of asset used against the revenue generated.
b) As the asset is continuously used it looses its value and efficiency
c) State the profit of the enterprises at a fair value
- Obsolescence (3Marks)
ii) Some business enterprise do not provide depreciation on freehold land and building
a) Land normally has indefinite useful life
b) Building are depreciable asset but some business have not treated buildings as
depreciable assets for the reason that the aggregate value of the building and the land on
which it stands does not decline. (2Marks)
A SCHEDULE ON FIXED ASSETS
Fixed assets
Details Freehold land Plant & Motor Furniture
& build. Equip vehicle & fittings
Balance b/f (cost) 825,000 1,312,500 970,500 187,500
Acquisition 210,000
Disposal (127,500)
Fully depreciated (22,500)
Balance c/f (cost) 825,000 1,312,500 1,053,000 165,000
Pro for depr. b/f - 507,300 316,500 48,010
Appreciation/depreciation (637,500) 123,375 263,250 20,625
Pro for depreciation on disposal - (127,500) (22,500)
Pro for depr. c/f - 630,675 452,250 46,125
NBV bal c/f 1,462,500 681,825 600,750 118,875