1.3. Accounting for non-current assets
A subsection of Accounting, 9706, through 1. Financial accounting (AS Level)
Listing 10 of 480 questions
For Examiner's Use Amirtha commenced business on 1 January 2010. During the first two years of business the following non-current assets were purchased on the dates shown: Motor vehicles $ 1 January MV1 26 000 1 July MV2 18 000 1 April MV3 24 000 Equipment 1 January EQ1 30 000 1 January EQ2 44 000 Amirtha has a policy to depreciate motor vehicles at 20% per annum on cost (straight line method) and equipment at 15% per annum on cost (straight line method), rates being charged for each month of ownership. REQUIRED Calculate the total depreciation for each of the years 2010 and 2011. Motor vehicles Equipment For Examiner's Use Early in 2012, consideration was given to changing to the reducing balance method, with the following rates applying to the balance at the end of each year. Motor vehicles 25% Equipment 20% A full year’s depreciation would be charged irrespective of the date of purchase. REQUIRED Calculate the total depreciation for each of the years 2010 and 2011, using the reducing balance method for: Motor vehicles Equipment. For Examiner's Use The original profits for the first two years in business were: $86 000 $94 000 REQUIRED Prepare a statement to show the revised profits for the years 2010 and 2011, if the reducing balance method had been used. Explain why it is appropriate to use the reducing balance method for motor vehicles. For Examiner's Use The following information is also available from the books of Amirtha. 1 January 2011 31 December 2011 $ $ Wages 2 040 accrued 2 130 accrued Insurance 130 accrued 610 prepaid Rent received 1 490 prepaid 1 320 prepaid During the year ended 31 December 2011 the following transactions took place. $ Wages paid 24 100 Insurance paid 1 400 Rent received 14 000 All transactions are through the bank account. REQUIRED Prepare the following ledger accounts for the year ended 31 December 2011, showing the closing entry to the financial statements at the end of the year. Dates are not required. Wages account For Examiner's Use Insurance account Rent received account For Examiner's Use 3 Wigmore Ltd uses one factory overhead recovery rate which is a percentage of total direct labour costs. The rate is calculated from the following budgeted data. Department Factory overheads Direct labour costs Direct labour hours Direct machine hours $ $ Production 150 000 500 000 120 000 7 000 Assembly 450 000 1 000 000 225 000 10 000 Packing 360 000 900 000 200 000 – The cost sheet for job 787 shows the following information. Department Direct labour costs Direct labour hours Direct machine hours Direct material costs $ $ Production 2 400 Assembly 1 100 Packing 1 000 – General administration expenses of 20% are added to the total factory cost. The selling price to the customer is based on a 25% net profit margin. REQUIRED Calculate the current factory overhead rate for Wigmore Ltd. For Examiner's Use Prepare a detailed cost statement to calculate the selling price for job 787. Calculate the overhead rate for each department using the following methods: Percentage of direct labour cost Production Assembly Packing For Examiner's Use Direct labour hour rate Production Assembly Packing Using the direct labour hour rates calculated in , prepare a detailed cost statement to calculate the new selling price for job 787. For Examiner's Use Discuss the problems associated with using predetermined overhead absorption rates. State the effect on profits if the factory does not operate at full capacity.
9706_s12_qp_23
THEORY
2012
Paper 2, Variant 3
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Bach runs a manufacturing business. An extract from his statement of financial position at 1 January 2012 is shown below: Non-current assets Cost Accumulated depreciation Net book value $ $ $ Factory premises 220 000 26 400 193 600 Machinery 138 600 52 200 86 400 During 2012 the following transactions took place for machinery. Disposals Date Machinery reference Year of purchase Initial cost Disposal proceeds $ $ 26 March M12 14 000 7 100 17 August M18 8 000 1 320 13 December M20 9 600 Additions Date Machinery reference Cost $ 20 April M27 11 500 25 October M31 16 200 All receipts and payments for these transactions are processed through the business bank account. All of the remaining machinery at 31 December 2012 was purchased after 2008. Depreciation on the factory premises is charged on a straight line basis based on a 50 year life, with no residual value. Depreciation on machinery is charged on a straight line basis based on a five year life and an estimated residual value of 10% of the original cost. It is the company policy to charge a full year’s depreciation in the year of purchase but none in the year of disposal. For Examiner's Use REQUIRED Prepare the following ledger accounts for the year ended 31 December 2012. Machinery account Provision for depreciation of machinery account For Examiner's Use Machinery disposals account Identify two alternative methods of providing for depreciation. State three causes of depreciation. For Examiner's Use Bach’s statement of financial position showed the following at 1 January 2013: Trade receivables $12 000 Trade payables $10 000 Bank balance $800 Dr Sales are paid in full one month after the sale Purchases are payable 50% in the month of purchase, the remainder one month later Other expenses are paid in the month they occur Budgeted sales, purchases and other expenses for the period January to March 2013 are as follows: January $ February $ March $ Sales 10 000 12 000 14 000 Purchases 8 000 12 000 16 000 Other expenses 5 000 5 000 5 000 Complete the following table to show the budgeted closing bank balance on 31 March 2013. Receipts January February March Receipts from customers Payments Payments to suppliers Other expenses Opening bank balance Net cash flow Closing bank balance For Examiner's Use Suggest two ways Bach could improve his budgeted bank balance at 31 March 2013.
9706_s13_qp_21
THEORY
2013
Paper 2, Variant 1
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Questions Discovered
480