Accounting 9706 · AS & A Level · Accounting for non-current assets
Accounting for non-current assets — practice question
Zainab applies the straight-line depreciation method to business vehicles. The business’s non-current assets consist of two vehicles. Vehicles lose 20% per annum through depreciation. In the year of acquisition, depreciation is worked out on a month-by-month basis. No depreciation is charged in the year of sale/disposal. The financial year finishes on 31 December.
(a)[3]
Prepare the journal entry that records the depreciation charge for the year ending 31 December 2022. A narrative is not needed.
(b)[3]
Prepare the account for Provision for depreciation - vehicles for the year ended 31 December 2022.
(c)[4]
Prepare the account for disposal of the vehicle.
(d)[1]
State one reason why the reducing balance method of depreciation may be more suitable for vehicles.
(e)[4]
Explain two accounting concepts that apply to depreciation.
Worked solution & mark scheme
This 15-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Debit Depreciation / Statement of profit or loss $7 080” …