Accounting for Non-Current Assets

Worked examples (10)

• 1Journal entry for depreciation (3 marks)
• 2Provision account over two years (5 marks)
• 3Show the asset in the SOFP (4 marks)
• 4Depreciation in both statements (5 marks)
• 5Provision for several assets (5 marks)
• 6Remove depreciation on disposal (5 marks)
• 7Provision account with a disposal (6 marks)
• 8Why keep a separate provision account (4 marks)
• 9Allocate depreciation in a company (5 marks)
• 10Provision vs revaluation method (4 marks)

Model answers (10)

• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2/3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 2/3 style
• ✓Model answer — 9706 Paper 2/3 style
• ✓Model answer — 9706 Paper 2/3 style

Worked examples (10)

• 1Define depreciation (2 marks)
• 2Causes of depreciation (4 marks)
• 3Calculate the depreciable amount (3 marks)
• 4Carrying value after two years (4 marks)
• 5Concept behind depreciation (4 marks)
• 6Why depreciation is not a cash fund (4 marks)
• 7Why land is not depreciated (3 marks)
• 8Prudence and depreciation (4 marks)
• 9Estimates in depreciation (4 marks)
• 10Matching the method to the asset (5 marks)

Model answers (10)

• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2/3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 evaluation style
• ✓Model answer — 9706 Paper 3 style

Worked examples (10)

• 1First-year charge (3 marks)
• 2Depreciation over three years (5 marks)
• 3Schedule with carrying values (5 marks)
• 4Carrying value after two years (4 marks)
• 5Compare with straight-line (6 marks)
• 6Total depreciation for two assets (5 marks)
• 7Find the carrying value to a target (5 marks)
• 8Why reducing balance suits vehicles (5 marks)
• 9Limitation of reducing balance (4 marks)
• 10Justify a method for two asset types (6 marks)

Model answers (10)

• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2/3 style
• ✓Model answer — 9706 Paper 2/3 style
• ✓Model answer — 9706 Paper 2/3 style
• ✓Model answer — 9706 Paper 3 evaluation style
• ✓Model answer — 9706 Paper 3 evaluation style

Worked examples (10)

• 1Annual charge from residual value (3 marks)
• 2Straight-line as a % of cost (3 marks)
• 3Three-year schedule (5 marks)
• 4Part-year depreciation (4 marks)
• 5Carrying value at a date (4 marks)
• 6Total depreciation for two assets (5 marks)
• 7Find the useful life (4 marks)
• 8Full-year / none-in-disposal policy (5 marks)
• 9When straight-line suits an asset (4 marks)
• 10Limitation of straight-line (5 marks)

Model answers (10)

• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2/3 style
• ✓Model answer — 9706 Paper 2/3 style
• ✓Model answer — 9706 Paper 2/3 style
• ✓Model answer — 9706 Paper 3 evaluation style

Worked examples (10)

• 1Basic revaluation calculation (3 marks)
• 2No purchases in the year (2 marks)
• 3Find the purchases (4 marks)
• 4Suitable assets (3 marks)
• 5Effect on the financial statements (4 marks)
• 6Two consecutive years (5 marks)
• 7Why use the revaluation method (4 marks)
• 8Weakness of the method (4 marks)
• 9Losses and breakages (4 marks)
• 10Choosing between methods (5 marks)

Model answers (10)

• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2/3 style
• ✓Model answer — 9706 Paper 3 evaluation style
• ✓Model answer — 9706 Paper 2/3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 2 style

Worked examples (10)

• 1State the disposal entries (4 marks)
• 2Disposal account with a profit (5 marks)
• 3Disposal account with a loss (5 marks)
• 4Disposal with part-exchange (6 marks)
• 5Disposal with depreciation to date (6 marks)
• 6Disposing of one of several assets (6 marks)
• 7Find the proceeds from the disposal account (5 marks)
• 8Purpose of the disposal account (4 marks)
• 9Effect of omitting the depreciation transfer (5 marks)
• 10Disposal result and depreciation policy (5 marks)

Model answers (10)

• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2/3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 2/3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style

Worked examples (10)

• 1Profit on disposal (3 marks)
• 2Loss on disposal (3 marks)
• 3Depreciate to the date of sale first (5 marks)
• 4Part-exchange profit (5 marks)
• 5Treatment in the statement of profit or loss (4 marks)
• 6Interpret a profit on disposal (4 marks)
• 7Net profit/loss on two disposals (5 marks)
• 8Find the proceeds from the profit (4 marks)
• 9Part-exchange with a loss (5 marks)
• 10Significance of disposal results (5 marks)

Model answers (10)

• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2 style
• ✓Model answer — 9706 Paper 2/3 style
• ✓Model answer — 9706 Paper 2/3 style
• ✓Model answer — 9706 Paper 3 evaluation style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style