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Fixed Assets - Disposal and Depreciation

The document discusses non-current assets and methods for calculating depreciation. It provides examples of types of non-current assets including office equipment, motor vehicles, machinery, furniture, land and buildings. It also discusses the straight-line and reducing balance (diminishing balance) methods for calculating depreciation. A number of questions and examples are provided relating to calculating and recording depreciation of various non-current assets in journal entries, ledger accounts, and financial statements.

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Teo Yu Xuan
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113 views8 pages

Fixed Assets - Disposal and Depreciation

The document discusses non-current assets and methods for calculating depreciation. It provides examples of types of non-current assets including office equipment, motor vehicles, machinery, furniture, land and buildings. It also discusses the straight-line and reducing balance (diminishing balance) methods for calculating depreciation. A number of questions and examples are provided relating to calculating and recording depreciation of various non-current assets in journal entries, ledger accounts, and financial statements.

Uploaded by

Teo Yu Xuan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Non Current Assets

➔ Fixed Assets ( 长期的，>1 year)


◆ Office Equipment 设备
◆ Motor Vehicles / Motor Van 交通工具
◆ Delivery Van
◆ Machinery 机器
◆ Office Furniture 家具
◆ Land and Buildings 土地与建筑物
◆ Property、Premises 房地产
◆ Plant and Machinery
◆ Fixture and Fitting

➔ 这些fixed assets都可能有折旧(depreciation)，看题目有没有要求你做.

➔ We got two formula to calculate :


◆ Straight line method/ On cost (直线法)
● Depreciation of this year = Cost (原价) x 题目给的%

➔ Reducing Balance Method/ Diminishing Balance Method / On Net


book value 递减法
◆ 第一年和直线法一样 Depreciation = Cost (原价) x 题目给的%
◆ 第二年拿Cost减去年的累计折旧，在乘题目给的%。
● (Cost - Accumulated Depreciation) X ??? %
Example 1
Rong Qi purchased a motor van by cheque for RM 10,000 on 1 January 2020, and purchased another
motor van on 1 July 2020. Depreciation is calculated at 10% p.a. by straight line method..

You are required to show :


(a) General Journal to record the purchase transaction and depreciation
(b) Motor Van
(c) Depreciation - Motor Van
(d) Accumulated Depreciation - Motor Van
(e) Profit And Loss account
(f) Income Statement(Extract)
(g) Statement Of Financial Position
(Remarks : Workings must be shown clearly)
Question 1
Yide purchased a land and building by cheque RM100,000 on 1 January 2020. He decided to depreciate
land and buildings by 10% by using a reducing balance method.

Please show :
(1) Workings to calculate the depreciation of 2020,2021 and 2022
(2) General Journal
(3) Land And Buildings
(4) Depreciation- Land and Buildings
(5) Accumulated Depreciation - Land and Buildings
(6) Income Statement (Extract)
(7) Statement Of Financial Position (Extract)

Question 2
Rong Qi is a sole trader, who ends his financial year on 31 December annually.

On 1 Jan 2020, accounts balances are shown as below :


Motor Van, RM 100,000
Accumulated Depreciation - Motor Van : RM 10,000

On 1 July, he purchased a motor van by issuing a cheque, RM 45,000.


Depreciation is calculated by reducing balance method, 10% yearly.

Please show the following accounts


(1) General Journal
(2) Depreciation - Motor Van
(3) Accumulated Depreciation - Motor Van
(4) Income Statement and Statement of Financial Position (extract)
Question 3
Tianxu’s books has shown the following balances on 1 January 2020 :
RM
Motor Van 20,000
Accumulated Depreciation 2,000
- Motor Van
Land And Buildings 100,000
Bank 700,000

He purchased a new motor van and Land and Buildings by cheque RM50,000 and RM600,000 on 1
January 2020.

Depreciation of non-current assets should be calculated as following methods:


Motor Van - Diminishing Method
Land And Buildings - On Cost

You are required to prepare the following requirements for the year ended 2020,2021,2022,2023 :
(a) General Journal to record all the transactions
(b) Motor Van
(c) Land and Buildings
(d) Accumulated Depreciation - Motor Van
(e) Accumulated Depreciation - Land and Buildings
(f) Income Statement (Extract)
(g) Statement Of Financial Position (Extract)

Question 4
Yide purchased the following vehicles on different date:
RM
Toyota 80,000 2016
Honda 90,000 2017
Proton 50,000 2018

All vehicles are depreciated by straight line method, 5% per year.

You are required to prepare the following accounts from 2016 to 2020 :
(1) General Journal
(2) Motor Van
(3) Depreciation - Motor Van
(4) Accumulated Depreciation - Motor Van
Example 2
Roy purchased a motor van in cost RM 20,000 on 1 January 2020. Depreciation should be made
on the rate of 10% per annum. On 1 January 2021, We decided to sell this motor van.

变卖 Sold Insurance Claims Trade in


1. Transfer the assets
original value to
disposal account.
2. Transfer the
accumulated
depreciation of this
motor van to
disposal account.
3. Sold/Insurance Sold it for RM 7,000 Claims for RM 10,000 Trade in a new motor
Claims/Trade In van RM 30,000, the old
one trade in for RM
5,000, and the balance
settled by cheque

4. Calculate it gain/loss
Question 5
Kee Zhan is a sole trader , who extracted accounts from his books, he ended his financial year at 31
December.
RM Bought on
Buildings 100,000 1 July 2018
Equipment 70,000 1 June 2019

Conditions :
● Buildings, 1% annually
● Equipment, 5% annually
● All in straight line method

You are required to prepare these following accounts from 2020 to 2021 :
(a) Working shown the depreciation from 2018 to 2021
(b) Depreciation - Buildings
(c) Accumulated Depreciation - Buildings
(d) Depreciation - Equipment
(e) Accumulated Depreciation - Equipment

Question 6
On 1 June 2020, Yide purchased machinery costing RM 100,000 by cheque. He depreciated machinery by
5% annually, by straight line method.

On 1 Jan 2023, Yide sold the machinery and received a cheque, RM 35,000.

You are required to show :


(a) Machinery
(b) Depreciation - Machinery
(c) Accumulated Depreciation - Machinery
(d) Disposal

Question 7
On 1 June 2018, John purchased a Motor van costing RM 60,000 by cheque. He depreciated Motor Van by
10% annually on its net book value.

On 1 July 2020, Yide traded in the motor van for RM 40,000 and purchased a new motor van costing RM
90,000, the balance was settled by cheque.

You are required to show :


(e) Motor Van
(f) Depreciation - Motor Van
(g) Accumulated Depreciation - Motor Van
(h) Disposal
Question 8
Shao Xuan purchased a new building for RM 500,000 by cheque on 1 July 2010.
He decided to depreciate the building on a 1% basis, by diminishing balance method.

On 30 April 2015, the building was totally destroyed in a flood, and the insurance company
agreed to pay Shao Xuan RM 350,000 for compensation.

You are required to show the accounts from 2014 to 2015 :


(a) Building
(b) Accumulated Depreciation - Building
(c) Depreciation - Building
(d) Disposal
(e) Income Statement (Extract)

Question 9

Yide purchased the following vehicles on different date:


RM
Toyota 80,000 2015
Honda 70,000 2016
Proton 60,000 2017

Proton was destroyed in a fire accident, on 20 June 2020, insurance company agreed to pay RM 40,000
by bank transfer.

Conditions :
All vehicles are depreciated by straight line method, 5% per year.
Full year depreciation is required, no depreciation made at the year of disposal.

You are required to prepare the following accounts from 2016 to 2020 :
1. General Journal
2. Motor Van
3. Depreciation - Motor Van
4. Accumulated Depreciation - Motor Van
5. Disposal
6. Income Statement (Extract)
7. Statement Of Financial Position (Extract)
Question 10
Roy extracted the following account balances from his books :
RM
Motor Van 123,000 2016
Machinery 70,000 2017
Furniture 5,000 2018

Depreciation’s conditions as follow :


(1) Motor Van, 10% per annum
(2) Machinery, 5% annually
(3) Furniture, 5% yearly

Furniture bought on 1 February 2018, Roy started calculating depreciation in 2016.

On 1 July 2020, machinery was sold for RM 50,000.

You are required to calculate :


(a) General Journal
(b) Machinery
(c) Depreciation - Motor Van
(d) Depreciation - Machinery
(e) Depreciation - Furniture
(f) Accumulated Depreciation - Motor Van
(g) Accumulated Depreciation - Machinery
(h) Accumulated Depreciation - Furniture
(i) Disposal of Machinery
Question 11
Marcus ended his financial year on 30 June yearly.
He bought these fixed-assets at different date :
RM Date
Machinery 126,000 1 June 2010
Delivery Van 50,000 1 July 2012

Conditions :
Machinery - 5% by straight line method
Delivery Van - 10% by diminishing balance method

Marcus purchased a new van on 1 August 2014, costing RM 67,000, and the old one was
traded in by RM 35,000.

You are required prepare these requirements from 2013 to 2015 :


(a) Workings of depreciation
(b) Delivery Van
(c) Accumulated Depreciation - Delivery Van
(d) Depreciation - Delivery Van
(e) Depreciation - Machinery
(f) Accumulated Depreciation - Machinery
(g) Profit and Loss

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