Accounting for depreciation and disposal of non-current assets：練習問題

Which of the following describes the revaluation method of depreciation?

A business provides for depreciation on its machinery at the rate of \(20\%\) per annum using the straight-line method. A machine costing \(\$15,000\) was purchased on 1 January 2021. Calculate the total accumulated depreciation for this machine as of 31 December 2023.

A machine costing \(\$20,000\) with accumulated depreciation of \(\$12,800\) was sold for \(\$6,500\) on credit. Calculate the profit or loss on disposal and state which ledger account will be credited to remove the original cost of the asset.

On 1 January 2022, a business purchased equipment for \(\$40,000\). It is depreciated at \(15\%\) per annum using the reducing balance method. On 31 December 2023, the equipment was sold for \(\$28,000\). Calculate the profit or loss on disposal and identify the ledger account to which the accumulated depreciation of the asset is transferred upon sale.

Omar started a business on 1 January 2022. On this date, he purchased a new delivery van for $30,000. The estimated useful life of the van is 5 years, and its residual value is estimated to be $5,000.

Omar depreciates non-current assets using the straight-line method.

On 31 December 2024, Omar sold the delivery van for $16,000 cash.

Required:

(a) Calculate the annual depreciation charge for the delivery van.

(b) Calculate the accumulated depreciation for the delivery van as at 31 December 2024 (before disposal).

(c) Calculate the net book value of the delivery van as at 31 December 2024 (before disposal).

(d) Calculate the profit or loss on the disposal of the delivery van.

On 1 January 2022, a business purchased a machine for \( \$40,000 \). The business uses the reducing balance method of depreciation at a rate of \( 25\% \) per annum. A full year's depreciation is charged in the year of purchase.

Required:
(a) Calculate the depreciation charge for the machine for the years ended 31 December 2022 and 31 December 2023.

(b) Prepare the provision for depreciation of machinery account for the two years ended 31 December 2023. Show the balance carried down at the end of each year.

(c) Suggest one reason why the reducing balance method might be more appropriate for machinery than the straight-line method.