- 4 Marks
FA – L1 – Q17 – Non-current assets and depreciation
Calculate depreciation for a non-current asset and a building using the straight-line method.
Question
(a) The financial year of a company is 1st January to 31st December. A non-current asset was purchased on 1st May for GH₵60,000. Its expected useful life is five years and its expected residual value is zero. It is depreciated by the straight-line method.
Required
Calculate the charge for depreciation in the year of acquisition if a proportion of a full year’s depreciation is charged, according to the period for which the asset has been held. (2 marks)
(b) An office property cost GH₵5 million, of which the land value is GH₵2 million and the cost of the building is GH₵3 million. The building has an estimated life of 50 years.
Required
Calculate the annual depreciation charge on the property, using the straight-line method.
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