Depreciable Amount

IA – OCT 2022 – L1 – Q6 – Depreciation Concepts and Calculations

Explain depreciation-related concepts and compute depreciation and net book value for solar equipment using straight-line method.

Question

a. Briefly explain the following concepts used in Accounting:

i. Depreciation

ii. Depreciable amount

iii. Net book value

iv. Straight line depreciation

v. Reducing balance depreciation

(10 marks)

b. The Managing Director of Agana Limited located at the Manya Krobo Municipality is uncomfortable with the impasse between the Municipality and the Electricity Company of Ghana. As such she decided to install solar equipment for her company. She purchased the equipment on 4th July 2021 at a cost of GH¢ 520,000. The estimated useful life of the asset is 10 years with a residual value of GH¢ 35,000. The company’s policy is to provide for a full year’s depreciation regardless of the date of purchase. You are required to:

i. Compute the rate of depreciation for the solar equipment using the straight-line method (2 marks)

ii. Compute the depreciation for the year 2021 using the straight-line method (4 marks)

iii. Compute the Net present value of the asset as at 31st December 2021 (4 marks)

(Total: 20 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Depreciable Amount, Depreciation, Depreciation Rate, Net Book Value, Net Present Value, Reducing Balance Depreciation, Straight Line Depreciation
Level: Level 1

Topic: reducing balance methods (IAS 16)
Series: OCT 2022

FR – Nov 2020 – L2 – Q6 – Property, Plant, and Equipment (IAS 16)

Discuss depreciation concepts and characteristics under IAS 16 and calculate machine cost, revenue expenditures, and carrying amounts over the years.

Question

Noodles Nigeria Limited (NNL) manufactures various types of noodles in Oluyole for sale across Nigeria. Recently, to sustain the company’s market leadership, NNL bought a brand new machine under the following conditions:

On September 1, 2016, NNL decided to upgrade the machine by adding new major components at a cost of N300,000,000. As a result of the upgrade, the remaining useful life was increased to 8,000,000 units and the residual value was revised to N114,000,000.

Required:
a. Describe what is meant by depreciable amount within the context of IAS 16 on property, plant, and equipment (PPE). (1 Mark)
b. Highlight THREE characteristics of depreciable assets under IAS 16. (3 Marks)
c. Describe the TWO models of accounting for cost of PPE under IAS 16. (3 Marks)
d. Calculate the following:
i. Machine cost. (3 Marks)
ii. Revenue expenditure over the years in the statement of profit or loss. (5 Marks)
iii. Carrying amounts of the machine over the years. (5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accounting Models, Depreciable Amount, Depreciable assets, IAS 16
Level: Level 2

Topic: Property, Plant, and Equipment (IAS 16)
Series: NOV 2020

IA – OCT 2022 – L1 – Q6 – Depreciation Concepts and Calculations

Explain depreciation-related concepts and compute depreciation and net book value for solar equipment using straight-line method.

Question

a. Briefly explain the following concepts used in Accounting:

i. Depreciation

ii. Depreciable amount

iii. Net book value

iv. Straight line depreciation

v. Reducing balance depreciation

(10 marks)

i. Compute the rate of depreciation for the solar equipment using the straight-line method (2 marks)

ii. Compute the depreciation for the year 2021 using the straight-line method (4 marks)

iii. Compute the Net present value of the asset as at 31st December 2021 (4 marks)

(Total: 20 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Depreciable Amount, Depreciation, Depreciation Rate, Net Book Value, Net Present Value, Reducing Balance Depreciation, Straight Line Depreciation
Level: Level 1

Topic: reducing balance methods (IAS 16)
Series: OCT 2022

FR – Nov 2020 – L2 – Q6 – Property, Plant, and Equipment (IAS 16)

Discuss depreciation concepts and characteristics under IAS 16 and calculate machine cost, revenue expenditures, and carrying amounts over the years.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accounting Models, Depreciable Amount, Depreciable assets, IAS 16
Level: Level 2

Topic: Property, Plant, and Equipment (IAS 16)
Series: NOV 2020

Question Tag: Depreciable Amount

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IA – OCT 2022 – L1 – Q6 – Depreciation Concepts and Calculations

Explain depreciation-related concepts and compute depreciation and net book value for solar equipment using straight-line method.

FR – Nov 2020 – L2 – Q6 – Property, Plant, and Equipment (IAS 16)

Discuss depreciation concepts and characteristics under IAS 16 and calculate machine cost, revenue expenditures, and carrying amounts over the years.

IA – OCT 2022 – L1 – Q6 – Depreciation Concepts and Calculations

Explain depreciation-related concepts and compute depreciation and net book value for solar equipment using straight-line method.

FR – Nov 2020 – L2 – Q6 – Property, Plant, and Equipment (IAS 16)

Discuss depreciation concepts and characteristics under IAS 16 and calculate machine cost, revenue expenditures, and carrying amounts over the years.

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IA – OCT 2022 – L1 – Q6 – Depreciation Concepts and Calculations

Explain depreciation-related concepts and compute depreciation and net book value for solar equipment using straight-line method.

You're reporting an error for "IA – OCT 2022 – L1 – Q6 – Depreciation Concepts and Calculations"

FR – Nov 2020 – L2 – Q6 – Property, Plant, and Equipment (IAS 16)

Discuss depreciation concepts and characteristics under IAS 16 and calculate machine cost, revenue expenditures, and carrying amounts over the years.

You're reporting an error for "FR – Nov 2020 – L2 – Q6 – Property, Plant, and Equipment (IAS 16)"

IA – OCT 2022 – L1 – Q6 – Depreciation Concepts and Calculations

Explain depreciation-related concepts and compute depreciation and net book value for solar equipment using straight-line method.

You're reporting an error for "IA – OCT 2022 – L1 – Q6 – Depreciation Concepts and Calculations"

FR – Nov 2020 – L2 – Q6 – Property, Plant, and Equipment (IAS 16)

Discuss depreciation concepts and characteristics under IAS 16 and calculate machine cost, revenue expenditures, and carrying amounts over the years.

You're reporting an error for "FR – Nov 2020 – L2 – Q6 – Property, Plant, and Equipment (IAS 16)"

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