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3 marksDepreciation and Capital versus Revenue Expenditure

CSEC Principles of Accounts · May/June 2014 · Paper 2 · Question 4(b)(i)

On 01 May 2013, Farley Caterers owned a delivery van (cost 200 000, net book value 140 000) depreciated at 30% per annum straight line, and an industrial stove (cost 60 000, net book value 38 400) depreciated at 20% per annum reducing balance.

Calculate the depreciation charge on the delivery van for the year ended 30 April 2014 using the straight line method, showing working clearly.

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Other parts of this question

  1. 4(a)(i)Define fixed asset and provide ONE example.[2 marks]
  2. 4(a)(ii)Define useful life and provide ONE example.[2 marks]
  3. 4(a)(iii)Define net book value and provide ONE example.[2 marks]
  4. 4(b)(ii)Draw up a balance sheet extract for the van showing cost, accumulated depreciation and net book value as at 30 April 2014.[4 marks]
  5. 4(b)(iii)Calculate the depreciation charge on the industrial stove for the year ended 30 April 2014 using the reducing balance method, showing working clearly.[3 marks]
  6. 4(b)(iv)Draw up the Provision for Depreciation Account for the industrial stove starting with the accumulated depreciation balance brought forward as at 01 May 2013.[4 marks]

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