3. Financial Reporting for Entities

Non-current Assets — Quiz

Test your understanding of non-current assets with 5 practice questions.

Practice Questions

Question 1

A company acquires a machine for $\$250,000. It has an estimated useful life of 5 years and a residual value of $\$25,000. The company decides to use the sum-of-the-years' digits method for depreciation. What is the depreciation expense for the first year?

Question 2

A company purchases a piece of equipment for $\$300,000. After 4 years, the carrying amount of the equipment is $\$180,000 and its recoverable amount is determined to be $\$150,000. What is the impairment loss to be recognized?

Question 3

A company revalues a building from its carrying amount of $\$400,000$ to a fair value of $\$500,000$. Previously, there was a revaluation deficit of $\$50,000 recognized in the Statement of Profit or Loss for this asset. How should the revaluation increase be accounted for?

Question 4

A company uses the reducing balance method of depreciation at a rate of $30\%$. A machine was purchased for $\$90,000. What is the net book value of the machine at the end of the third year?

Question 5

A company purchases a machine for $\$200,000$ and incurs $\$10,000$ in installation costs and $\$5,000 in testing costs before the machine is ready for use. The company also pays $\$2,000 for staff training on how to operate the machine. What is the total capitalized cost of the machine?