Question

Question 9
Which is the true statement?
a. A revaluation decrease should occur if a non-current asset's carrying amount is less than its fair value.
b. An initial revaluation decrease should be treated as a debit to the revaluation surplus reserve.
c. An initial revaluation decrease should be treated as a debit against the current period’s profit or loss.
d. An initial revaluation decrease should be disclosed in the profit report as a reduction in other comprehensive income.

Question 11
The balance sheet of Doorbell Ltd at 31 December 2014 showed:             
   $
Equipment 80 000
Accumulated depreciation of equipment 63 000
17 000
On 1 January 2015 the equipment was sold for $15 000. What is the accounting entry to record the receipt of the proceeds from the sale of the equipment?

a. Debit bank $15 000; credit proceeds from sale of equipment $15 000
b. Debit bank $17 000; credit proceeds from sale of equipment $17 000
c. Debit bank $15 000; credit equipment $15 000
d. Debit bank $2000; credit proceeds from sale of equipment $2000

Question 12
If a computer with a fully depreciated cost of $30 000 is discarded as worthless, the accounting entry to record the scrapping is which of the following?
a. Debit expense on disposal of asset $30 000; credit computer $30 000
b. Debit expense on disposal of asset $30 000; credit accumulated depreciation computer $30 000
c. Debit accumulated depreciation computer $30 000; credit computer $30 000
d. Debit accumulated depreciation computer $30 000; credit computer $30 000; Debit expense on disposal of asset; credit proceeds of disposal of asset $30 000
Question 13
On 31 December 2013 a printing machine with a cost of $380 000 has accumulated depreciation written off of $140 000. If it is sold for $220 000 on 1 January 2014 what will be the net effect of the sale on the income statement?
a. $20 000 profit
b. $20 000 loss
c. $160 000 loss
d. $80 000 profit

Question 14
Billy’s Computer Shop purchased some new equipment trading in old equipment with a carrying amount of $10 000. Cash of $9000 was paid to the supplier and a trade-in allowance of $7000 was granted. The new equipment should be recorded at:
a. $19 000.
b. $16 000.
c. $9000.
d. $7000.

Question 15
On 31 December 2014 an aeroplane with a cost of $200 000 has accumulated depreciation written off of $90 000. If it was sold for $130 000 on 1 January 2015 how much will be recorded as the expense carrying-value on the disposal of the plane?
a. $200 000
b. $130 000
c. $110 000
d. $90 000

Answer 1

Question 9: (b) An initial revaluation decrease should be treated as a debit to the revaluation surplus reserve.

Initial Revaluation decrease should be debited to the related Asset Revaluation Surplus not exceeding the value of Revaluation Surplus. Any excess, can be charged from Statement of Income and Loss.

.

Question 11: (a) Debit bank $15 000; credit proceeds from sale of equipment $15 000

After this entry, another entry will be recorded:

proceeds from the sale of equipment dr. Accumulated Depreciation dr Loss on sale of equipment dr. .To Equipment

15,000 63,000 2,000

. . . 80,000

Therefore, Equipment is not credited in the first place.

.

Question 12: (c) Debit accumulated depreciation computer $30 000; credit computer $30 000

There is no expense on the disposal of an asset, so it will not be debited. Accumulated Depreciation will be debited to transfer the fully charged depreciation the cost of an asset.

.

Question 13: (b) $20 000 loss

	($)		($)
To Balance	380,000	By Cash	220,000
		By Accumulated Depreciation	140,000
		By Loss on sale (balancing figure)	20,000
	380,000		380,000

.

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Please ask 4 questions in a single time as per the guidelines.

Feel free to ask any doubt.