I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

 

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34 A   

35 

B 

1,000,000/40 years = 25,000; 1,000,000 – (800,000 – (800,000 × 2% × 10 years)) 

= 360,000  

36 

A 

If disposal proceeds were $15,000 and profit on disposal is $5,000, then carrying value 

must be $10,000, the difference between the asset register figure and the non-current 

asset account in the nominal ledger. 

37 

D 

Non-current assets will be understated, leading to a lower net assets position. 

Additionally, too much will have been charged in the statement of profit or loss, resulting 

in an understatement of profit. 

38 

C 

Repair and maintenance of machinery is revenue expenditure. The cost of installing new 

machinery can be added to the cost of the machine and capitalised, therefore it is capital 

expenditure. An extension to a factory building is capital expenditure, as it enhances the 

existing factory.  

39 C   

 

 

 

Charge for 

year 

Trucks at 1 Jan 

 

$'000 

$'000 

 Cost 

(240  – 60) 

180,000 

 

 Acc dep'n 

(115 – (60 – 20)) 

   75,000 

 

 Carrying value 

 

 105,000 

 

Dep'n charge @ 20% 

 

21,000 

21,000 

Purchased truck 

 

 

 

Dep'n charge @ 20% 

160 @ 20% 

32,000 

 32,000 

 

 

 

 53,000 

40 

B 

There is no requirement that development expenditure should be amortised over a period 

not exceeding five years. 

41 

D 

The development expenditure should be capitalised and amortised over 25 years, giving 

the statement of financial position balance as 500,000 – 500,000/25 = $480,000, and 

$20,000 charged to the statement of profit or loss.  

The research expenditure should be charged to the statement of profit or loss in full, 

therefore the total charge to the statement of profit or loss is $420,000.  

42 

D 

Amortisation for the year = $1,000,000* × 5% = $50,000.  

 

 

* Cost = carrying value ($950,000) + accumulated amortisation ($50,000) 

43 

B 

The prepayment will add $2,100 to profit and net assets. 

The accrual will reduce profit and net assets by $800. 

The net effect will be to increase both by $1,300. 

44 

A 

(120,000 × 7/12) + (144,000 × 5/12) = 130,000; rent is payable in advance, 

therefore the rent for October has been prepaid at 30 September 20X8: 144,000 × 1/12 

= 12,000  

45 B   

RENT 

RECEIVABLE 

 

 

$   

 

 

$   

Balance b/d 

 

53,000 

Balance b/d 

 

71,750 

Statement of profit or loss 

 

1,189,750 

Cash received 

1,203,000 

Balance c/d 

 

     78,000 

Balance c/d 

 

     46,000 

 

 

1,320,750 

 

 

1,320,750 

46 

A 

Prepaid expenses are not included in the statement of profit or loss for the current period, 

as they do not relate to that period. The expenses are instead shown in the period to 

which they relate, in accordance with the accruals concept.  

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