Assignment Question(s) : Instructions - Please Read Them Carefully

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Instructions – PLEASE READ THEM CAREFULLY

 The Assignment must be submitted on Blackboard (WORD format


only) via allocated folder.
 Assignments submitted through email will not be accepted.
 Students are advised to make their work clear and well presented,
marks may be reduced for poor presentation. This includes filling your
information on the cover page.
 Students must mention question number clearly in their answer.
 Late submission will NOT be accepted.
 Avoid plagiarism, the work should be in your own words, copying from
students or other resources without proper referencing will result in
ZERO marks. No exceptions.
 All answered must be typed using Times New Roman (size 12,
double-spaced) font. No pictures containing text will be accepted and
will be considered plagiarism).
 Submissions without this cover page will NOT be accepted.

Assignment Question(s): (5 Marks)


Q1- 

On your own words, describe the methods that companies can implement to
depreciate plant assets. (2 Marks).

Q2- 

Give a numerical example of:

A) Current liabilities.
B) Long-term liabilities (2 marks).

Q3. What are the characteristics of corporations (1 mark).


1)

Implies decrease in the estimation of fixed resources because of utilization, section of

time or outdated nature.

Methods that can be used to depreciate plant assets can be:

1. Straight line method: In this, depreciation per year is = (Cost - Residual value) /

useful life. Here, same amount is charged as depreciation each year. It determines the

estimated salvage value (scrap value) and at the end of its life and then subtract that

value from original cost.

2. Reducing balance method: Here a fixed percentage of depreciation is charged on

net book value of plant assets I.e. on written down value of asset. Hence, value of

depreciation decreases each year. It is also a type of accelerated dept. used to write off

depreciation costs more quickly and minimizing tax exposures.

3. Unit of production method: Here, depreciation is charged on the basis of actual unit

produced by plant assets and it's estimated total units produce able in useful life. It is

most suitable for plant assets.

2)

A) Current Liabilities: current liabilities are those liabilities; the business owners

must settle within one year or otherwise within the operating cycle of balance

sheet. These are the short-term liabilities of business, incurred on the day to day

operations.

Example of Current Liabilities:

Goods purchased from suppliers on credit worth $ 500. This will entail a current

liability in the name of supplier/ trade creditor.


B) Long-term liabilities: long term liabilities are otherwise known as the long-term

debts or non-current liabilities which are due more than one year. These are the

long period debts of a business.

Example of Long-term liabilities:

Took a loan from bank for $ 50,000 at 4% interest repayable after 5 years. This is a

long-term liability as will be paid after 1 operating cycle.

3)

Characteristics of corporations;

A) Corporation has limited liability it means that any loans, credit cards, mortgages or

revolving credit with vendors are sole responsibility of the company. There will be a

limited liability to the shareholders. The liability of shareholders will be limited to the

amount, they invested in the business.

B) Corporation is owned by Shareholders. When corporation is formed, a fixed

number of company stock shares are issued.

C) Corporation have their own lifespan. A Corporation has its own element, which

means it has a life expectancy that possibly closes when the directorate and

proprietors vote to break down the business. Usually the corporations have long term

life. Any death or inability of shareholders or employees do not affect the continuity of

business in corporations.

D) Management is professional under corporations. The corporations are to be

managed by the professionals. A professional will be hired by the owner for the smooth

functioning of business, through professional management methods. The owners of a

corporations may be able to vote on decisions of Board of directors to make final to


make final directive, but the shareholders are not necessarily managers of the

company.

E) Ownership is based on the number of shares. Any investor has a rate possession in

the company, controlled by separating the quantity of shares they own by the quantity

of exceptional shares.

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