- 12 Marks
FA – L1 – Q27 – Non-current assets and depreciation
Explain the terms depreciation and useful life of a non-current asset for Kofi Ansah. List four factors/causes contributing to depreciation of a non-current asset.
Question
(A) Explain the following Terms:
(i) Depreciation.
(ii) Useful life of a non-current asset.
(B) There are four (4) factors/causes that contribute to depreciation of a Non-current asset. List these factors or causes.
(C).
Kofi Ansah is a trader who prepares accounts to 31st December each year. The following transactions with regard to assets have taken place:
(i) 3rd January, 20X7 purchased one office equipment (laptop) for GH¢2,000.
(ii) 5th July, 20X8 purchased plant and machinery costing GH¢50,000.
(iii) 1st December, 20X8 purchased plant and machinery for GH¢20,000.
(iv) 15th December, 20X9 bought office equipment (printer) for GH¢1,000.
Mr. Kofi maintains its non-current assets at cost and depreciates its assets at a constant rate of 20% using the straight-line method of providing for depreciation for all assets. Assets purchased attract full depreciation charge in the year of purchase, whilst any asset disposed of attracts no depreciation charge.
Required:
Prepare the following:
(i) Plant and machinery account.
(ii) Office equipment account.
(iii) Accumulated depreciation account.
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