ACCA Applied Knowledge (BT, MA, FA) · Financial Accounting (FA)

Non-current assets and depreciation

12 practice questions, each with the answer and an explanation.

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Random questions from this topic, one at a time. You see the answer and the explanation straight after each one.

All 12 questions

  1. A machine costs £48,000, has an estimated residual value of £3,000 and a useful life of 5 years. What is the annual depreciation charge using the straight-line method?
  2. A company buys a machine on 1 April for £60,000 and depreciates it at 20% per year on cost, with a pro-rata charge in the year of purchase. The year end is 31 December. What is the depreciation charge…
  3. A vehicle cost £25,000 and is depreciated at 30% per year on the reducing balance method. What is the depreciation charge in the third year?
  4. A machine originally cost £24,000 and has accumulated depreciation of £15,000 at the date of sale. It is sold for £7,500 cash. What is the profit or loss on disposal?
  5. A business exchanges an old machine for a new one. The old machine cost £30,000 and had accumulated depreciation of £21,000. The supplier gives a part-exchange allowance of £12,000 and the business pa…
  6. A company revalues land from a carrying amount of £120,000 to £150,000 under IAS 16. How is the £30,000 increase accounted for?
  7. A building was revalued to £400,000 at the start of the year. It has a remaining useful life of 20 years and no residual value. What is the depreciation charge for the year under IAS 16?
  8. Which of the following is capital expenditure?
  9. Delivery and installation charges of £1,200 and legal fees of £800 on purchasing a machine for £20,000 were charged to the statement of profit or loss. Training for staff on using the machine cost £50…
  10. A machine cost £50,000 and was bought on 1 January Year 1. Depreciation is 10% per year straight-line, with no residual value, charged monthly for the months of ownership. The machine is sold on 30 Ju…
  11. A machine cost £60,000 and was depreciated straight-line over 10 years with no residual value. After 4 years the useful life is re-estimated and the machine is expected to last a further 8 years from…
  12. A building cost £400,000 on 1 January Year 1 with a useful life of 40 years and no residual value. It is revalued on 31 December Year 4 to £450,000 under IAS 16. What revaluation surplus is recognised…

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