ICAEW ACA ACCOUNTING EXAM ACTUAL

ICAEW ACA ACCOUNTING EXAM (ACTUAL / )

QUESTIONS & VERIFIED correct ANSWERS

Double entry for purchase of non-current assets - --- Answers____Dr Non-Current Assets Cr Bank/Cash/Payables

Cost of a non-current asset - ---Answers____Amount incurred to acquire the asset and bring it into working condition.

Any type of CAPITAL EXPENDITURE. They are capitalised i.e included in the SFP.

Classification of subsequent expenditure on Non-current assets - ---Answers____Recorded as part of the cost (or capitalisation) if it enhances the benefits of the asset i.e.increasing revenue capability.

E.g An extension to a shop building to provide extra selling space.Purchasing new computers for a new workspace.

Depreciation - ---Answers____The systematic allocation of the depreciable amount of an asset over its useful life.

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Ways depreciation of an asset could happen - ---Answers____• Use of asset • Physical wear & tear • Passing of time • Obsolesce through technology & market changes • Depletion

Subsequent Depreciation Equation - ---Answers____(carrying amount @ date change - RV) / Remaining UEL

OR Reducing balance

Depreciation= % x carrying amount at date estimate changed

Effect of depreciation on SFP - ---Answers____Reduce value of NCA due to wearing out

Effect of depreciation on SPL - ---Answers____Record as an expense to match revenue generated by the NCA

Purposes of Depreciation - ---Answers____• To reflect the accruals or matching concept • Not to show the asset at its current value in the SOFP • Not to provide a fund for the replacement of the asset

Factors affecting depreciation charge - ---Answers____• Cost

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