Accounting 9706 · AS & A Level · Accounting for non-current assets

Accounting for non-current assets — practice question

A business reduces the carrying amount of its non-current assets through depreciation.
(a)[4]

Explain why a business should follow the following concepts when accounting for non-current assets. Prudence Accruals (matching)

(b)[8]

Prepare the provision for depreciation on plant and machinery account for the year ended 30 June 2018. Dates must be included.

(c)[3]

Explain the effect on the financial statements for the year ended 30 June 2018 of settling the new machine's cost 15 months after the date of purchase.

Worked solution & mark scheme

This 15-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Prudence: overstatement of non-current assets” …

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