Tag: Topic 3

Alex plc has the following note to its statement of financial position relating to plant and machinery as at 31 May.

2017   2016

   £   £

• Cost   110,000   92,000
• Accumulated depreciation   72,000   51,000  
• Carrying amount   38,000   41,000

During the year to 31 May 2017, the following transactions occurred in relation to plant and machinery:

• Additions £39,000
• Loss on disposals £2,000
• Depreciation charge £27,000

What were the proceeds from disposals of plant and machinery received by Alex plc in the year to 31 May 2017?

Select ONE answer:

1. £7,000
2. £8,000
3. £13,000
4. £17,000

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 3

1. Not correct
2. Not correct
3. Correct
4. Not correct

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Alex plc includes profits and losses on disposal of non-current assets in administrative expenses in its income statement.

Alex plc’s policy is for depreciation to be charged on fixtures and fittings at 20% using the reducing balance method.

On 1 July 2016, some fixtures that cost £4,000 on 1 July 20X3 were sold for £150.

In the administrative expenses account Alex plc must?

Select ONE answer:

1. Debit £1,450
2. Credit £1,450
3. Debit £1,898
4. Credit £1,898

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 3

1. Not correct
2. Not correct
3. Correct – The debit to administrative expenses is the loss on disposal of £1,898. Cost £4,000 – Acc depn (£4,000 – (£4,000 x 0.8 x 0.8 x 0.8)) £1,952 – Proceeds £150 = Loss of £1,898 i.e. debit to administrative expenses
4. Not correct

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

On 1 April 2015 Alex plc bought a Stafford car for £23,500.

The company’s depreciation policy for cars is 30% per annum using the reducing balance method.

On 1 April 2017, the Stafford car was part exchanged for a Derby car, which had a purchase price of £28,200.

Alex plc handed over a cheque to the seller for £19,350, in final settlement.

What was Alex plc’s profit or loss on the disposal of the Stafford?

Select ONE answer:

1. £5,150 loss
2. £7,835 profit
3. £2,665 loss
4. £6,250 loss

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 3

1. Not correct
2. Not correct
3. Correct –> Cost £23,500 – Accumulated Depreciation £11,985 – PEV £8,850 = £2,625 Loss
4. Not correct

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