Tag: Capital Expenditure

Alex plc purchased some plant and equipment on 1 July 2021 for £40,000.

The estimated scrap value of the plant in ten years’ time is estimated to be £4,000.

Alex plc’s policy is to charge depreciation monthly on the straight-line basis.

The depreciation charge on the plant in Alex plc’s income statement for the reporting period of twelve months ending 30 September 2021 should be?

Select ONE answer:

1. £900
2. £1,000
3. £2,700
4. £3,000

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct – (£36,000/120 x 3 = £900
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

Alex Ltd’s policy for depreciation of its plant and machinery is to charge depreciation monthly at 20% per year on cost.

Alex Ltd’s plant and machinery account for the year ended 30 September 2023 is shown below:

PLANT AND MACHINERY

Dr Entries =
2022
1 Oct Balance (all plant purchased after 20X0) £200,000

2023
1 Apr Cash purchase of plant £50,000

Total £250,000

                        Cr Entries = 
                        2023
                        30 Jun  Disposal account                                £40,000
                        30 Sep  Balance                                         £210,000

                        Total                                                               £250,000

What should be the depreciation charge in Alex Ltd’s income statement for plant and machinery (excluding any profit or loss on the disposal) for the year ended 30 September 2023?

Select ONE answer:

1. £43,000
2. £51,000
3. £42,000
4. £45,000

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct – (Plant held all year (200,000 -40,000) x 20% = £32,000 + Disposal 40,000 x 20% 9/12 = £6,000 + Additions 50,000 x 20% x 6/12 = £5,000 ==> £43,000
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

A plant account is shown below:

PLANT

DR  1 January 2023  Balance Plant Purchased 2021  £380,000

DR  1 April 2023  Cash – plant purchased  £51,000

DR  Total  £431,000

CR  1 October 2023  Disposal – Cost of plant sold  £30,000

CR  31 December 2023  Balance  £401,000

CR  Total  £431,000

The company’s policy is to charge depreciation on plant monthly at 20% per year on the straightline basis.

What should the company’s plant depreciation charge be in the income statement for the year

ended 31 December 2023?

Select ONE answer:

1. £82,150
2. £79,150
3. £77,050
4. £74,050

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct – (Plant held all year (380,000 – 30,000) x 20% = £70,000 + New plant (51,000 x 20%x 9/12) = £7,650 – Plant disposed of (30,000 x 20% x 9/12) = £4,500 ==> £82,150
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

The carrying amount of Alex Trading Ltd’s non-current assets was £200,000 at 1 August 2022.

During the year ended 31 July 2023, the company sold non-current assets for £25,000 on which it made a
loss of £S,000.

The depreciation charge for the year was £20,000. The carrying amount of non-current assets at 31 July 2023 is?

Select ONE answer:

1. £150,000
2. £175,000
3. £180,000
4. £195,000

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct –   ((200,000 – 20,000- 25,000 -5,000 = 150,000)
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.