Chapter 13 Straight-Line Depreciation - Test

1. VCE ACCOUNTING
UNIT 3 – RECORDING AND REPORTING FOR A TRADING BUSINESS
CHAPTER 13 – DEPRECIATION OF NON-CURRENT ASSETS
© Michael Allison, Trinity Grammar School.
Author’s permission required for external use
Page | 1
Chapter 13 Test – Depreciation of Non-Current Assets
Name ___________________________________________
Circle the correct response for each question:
1. (a) (b) (c) (d)
2. (a) (b) (c) (d)
3. (a) (b) (c) (d)
4. (a) (b) (c) (d)
5. (a) (b) (c) (d)
6. (a) (b) (c) (d)
7. (a) (b) (c) (d)
8. (a) (b) (c) (d)
9. (a) (b) (c) (d)
10. (a) (b) (c) (d)
11. (a) (b) (c) (d)
12. (a) (b) (c) (d)
13. (a) (b) (c) (d)
14. (a) (b) (c) (d)
15. (a) (b) (c) (d)
16. (a) (b) (c) (d)
17. (a) (b) (c) (d)
18. (a) (b) (c) (d)
19. (a) (b) (c) (d)
20. (a) (b) (c) (d)
21. (a) (b) (c) (d)
22. (a) (b) (c) (d)
23. (a) (b) (c) (d)
24. (a) (b) (c) (d)
25. (a) (b) (c) (d)
Total /25 marks

2. VCE ACCOUNTING
UNIT 3 – RECORDING AND REPORTING FOR A TRADING BUSINESS
CHAPTER 13 – DEPRECIATION OF NON-CURRENT ASSETS
© Michael Allison, Trinity Grammar School.
Author’s permission required for external use
Page | 2
Chapter 13 Test – Depreciation of Non-Current Assets
1. Depreciation expense represents:
a) The revenue generated from using a non-current asset during the reporting period
b) The amount of a non-current asset that is consumed (used-up) during the reporting period
c) The profit from using a non-current asset during the reporting period
d) All of the above
2. Recording depreciation enables a business to comply with which accounting principle?
a) Relevance
b) Historical cost
c) Conservatism
d) Reporting period
3. The “cost” of a non-current asset consists of:
a) The purchase (invoice) price plus all other costs required to get the asset in a condition and
location to earn revenue
b) The purchase cost
c) The historical cost
d) The original purchase cost less the accumulated depreciation
4. The carrying value of a non-current asset:
a) Is equal to its cost minus its accumulated depreciation
b) Represents the unused portion of the asset
c) Represents the future economic benefits the asset will provide
d) All of the above
A small business purchased a new computer system on 1 April 2015 with the following information:
Purchase price $5300
Servicing contract $180 per year
Insurance $70 per year
Installation fee $100
The owner estimates that the computer system will be used for four years and will then be sold for
around $1,000.
5. The cost of the asset for depreciation purposes is:
a) $5,400
b) $5,300
c) $5,650
d) $5,580

3. VCE ACCOUNTING
UNIT 3 – RECORDING AND REPORTING FOR A TRADING BUSINESS
CHAPTER 13 – DEPRECIATION OF NON-CURRENT ASSETS
© Michael Allison, Trinity Grammar School.
Author’s permission required for external use
Page | 3
6. The depreciation per annum under the straight-line method is:
a) $1,100
b) $1,075
c) $1,325
d) $1,145
7. The entry to record the depreciation for the year ended 31 December 2015 is:
a)
Date Particulars
General Ledger
Debit $ Credit $
31 Dec Depreciation – Computer 1100
Accumulated dep’n - Computer 1100
b)
Date Particulars
General Ledger
Debit $ Credit $
31 Dec Accumulated dep’n - Computer 825
Depreciation – Computer 825
c)
Date Particulars
General Ledger
Debit $ Credit $
31 Dec Depreciation – Computer 825
Accumulated dep’n - Computer 825
d)
Date Particulars
General Ledger
Debit $ Credit $
31 Dec Accumulated dep’n - Computer 1100
Depreciation – Computer 1100

4. VCE ACCOUNTING
UNIT 3 – RECORDING AND REPORTING FOR A TRADING BUSINESS
CHAPTER 13 – DEPRECIATION OF NON-CURRENT ASSETS
© Michael Allison, Trinity Grammar School.
Author’s permission required for external use
Page | 4
A firm purchased a new photocopier for the business on 1 July 2015. The purchase price of the
photocopier was $16,000. The manufacturer also charged the business $2,000 to deliver and set-up
the device. The owner estimates that the photocopier will last for five years and will be sold for
about $3,000 at this time. The firm’s reporting period ends on 31 December each year.
8. The depreciation expense for the photocopier for the year ended 31 December 2015 is:
a) $3,000
b) $2,600
c) $1,300
d) $1,500
9. Once all balancing procedures have been completed on 31 December 2017, the Accumulated
Depreciation ledger will look like:
a)
Accumulated Depreciation – Vehicle
31 Dec 15 Depreciation – Vehicle 1500
31 Dec 16 Depreciation – Vehicle 3000
31 Jan 17 Depreciation – Vehicle 3000
b)
Accumulated Depreciation – Vehicle
31 Dec 15 Depreciation – Vehicle 3000
31 Dec 16 Balance 6000 31 Dec 16 Depreciation – Vehicle 3000
6000 6000
1 Jan 17 Balance 6000
31 Dec 17 Balance 9000 31 Jan 17 Depreciation – Vehicle 3000
9000 9000
1 Jan 18 Balance 9000
c)
Accumulated Depreciation – Vehicle
31 Dec 15 Depreciation – Vehicle 1500
31 Dec 16 Balance 4500 31 Dec 16 Depreciation – Vehicle 3000
4500 4500
1 Jan 17 Balance 4500
31 Dec 17 Balance 7500 31 Jan 17 Depreciation – Vehicle 3000
7500 7500
1 Jan 18 Balance 7500
d)
Accumulated Depreciation – Vehicle
31 Dec 15 Depreciation – Vehicle 3000
31 Dec 16 Depreciation – Vehicle 3000
31 Jan 17 Depreciation – Vehicle 3000

5. VCE ACCOUNTING
UNIT 3 – RECORDING AND REPORTING FOR A TRADING BUSINESS
CHAPTER 13 – DEPRECIATION OF NON-CURRENT ASSETS
© Michael Allison, Trinity Grammar School.
Author’s permission required for external use
Page | 5
A new delivery van was purchased by a small trading business on 1 June 2015 for $21,000. In
addition, annual registration and insurance of $1,200 and $3,000 stamp duty was paid. The
estimated useful life of the van is four years and the estimated residual value is $6,240. The firm
reports annually on 30 June each year.
10. The annual depreciation expense is:
a) $3,690
b) $4,740
c) $6,000
d) $4,440
11. The entry in the General Journal to record the depreciation for the year ended 30 June 2015 is:
a)
Date Particulars
General Ledger
Debit $ Credit $
30 Jun Depreciation – Delivery Van 4440
Accumulated dep’n – Delivery Van 4440
b)
Date Particulars
General Ledger
Debit $ Credit $
30 Jun Accumulated dep’n – Delivery Van 370
Depreciation – Delivery Van 370
c)
Date Particulars
General Ledger
Debit $ Credit $
30 Jun Depreciation – Delivery Van 370
Accumulated dep’n – Delivery Van 370
d)
Date Particulars
General Ledger
Debit $ Credit $
30 Jun Accumulated dep’n – Delivery Van 4440
Depreciation – Delivery Van 4440

6. VCE ACCOUNTING
UNIT 3 – RECORDING AND REPORTING FOR A TRADING BUSINESS
CHAPTER 13 – DEPRECIATION OF NON-CURRENT ASSETS
© Michael Allison, Trinity Grammar School.
Author’s permission required for external use
Page | 6
12. On 30 June 2015, 2016 and 2017, the Balance Sheet reporting the delivery van will look like:
a)
Balance Sheet (Extract) as at 30 June...
2015 2016 2017
Non-Current Assets
Delivery van 24000 23630 18820
less Accumulated depreciation 370 4810 9250
Carrying value 23630 18820 9570
b)
Balance Sheet (Extract) as at 30 June...
2015 2016 2017
Non-Current Assets
Delivery van 24000 24000 24000
less Accumulated depreciation 370 4440 4440
Carrying value 23630 19560 19560
c)
Balance Sheet (Extract) as at 30 June...
2015 2016 2017
Non-Current Assets
Delivery van 24000 23630 19190
less Accumulated depreciation 370 4440 4440
Carrying value 23630 19190 14750
d)
Balance Sheet (Extract) as at 30 June...
2015 2016 2017
Non-Current Assets
Delivery van 24000 24000 24000
less Accumulated depreciation 370 4810 9250
Carrying value 23630 19190 14750

7. VCE ACCOUNTING
UNIT 3 – RECORDING AND REPORTING FOR A TRADING BUSINESS
CHAPTER 13 – DEPRECIATION OF NON-CURRENT ASSETS
© Michael Allison, Trinity Grammar School.
Author’s permission required for external use
Page | 7
13. The relationship between depreciation and relevance and reliability is:
Relevant Reliable
a) Yes Yes
b) Yes No
c) No Yes
d) No No
On 1 September 2015 the proprietor of a small business purchased shop fittings for $15,000 cash
and has decided to depreciate them at a rate of 20% using the straight-line method. The books of
the business are closed on 31 December each year.
14. Once all adjusting and closing entries have been made on 31 December 2015, the firm’s
Depreciation account will look like:
a)
Depreciation – Shop Fittings
31 Dec Acc. dep’n – Shop fittings 1000 31 Dec Profit and loss summary 1000
1000 1000
b)
Depreciation – Shop Fittings
31 Dec Acc. dep’n – Shop fittings 1000
c)
Depreciation – Shop Fittings
31 Dec Acc. dep’n – Shop fittings 3000 31 Dec Profit and loss summary 3000
3000 3000
d)
Depreciation – Shop Fittings
31 Dec Shop fittings 1000 31 Dec Profit and loss summary 1000
1000 1000
15. At 31 December 2018 the carrying value of the shop fittings will be:
a) $3,000
b) $5,000
c) $0
d) $15,000

8. VCE ACCOUNTING
UNIT 3 – RECORDING AND REPORTING FOR A TRADING BUSINESS
CHAPTER 13 – DEPRECIATION OF NON-CURRENT ASSETS
© Michael Allison, Trinity Grammar School.
Author’s permission required for external use
Page | 8
A small trading business purchased a new delivery van on 1 October 2014 for $29,400. In addition,
shelving costing $1,600 was installed in the van on the same day to enable deliveries to be made to
customers. The firm depreciates non-current assets using the straight-line method. It is planned to
use the van for five years and trade it in for $13,000 at this time.
16. The cost of the van is:
a) $27,800
b) $29,400
c) $31,000
d) $1,600
17. Depreciation will be recorded in the Income Statement for the year ended 30 June 2015 as
follows:
Section of Income Statement Amount
a) Other Expenses 2700
b) Other Expenses 3600
c) Cost of Goods Sold 3600
d) Other Expenses 900
18. The accumulated depreciation of the van at 30 June 2017 will be:
a) $21,100
b) $10,800
c) $8,100
d) $9,900
A small business has provided the following ledgers regarding its vehicle, which is depreciated using
the straight-line method.
Vehicle
1/5/15 Cash at bank 37000
Depreciation – Vehicle
31/12/15 Acc. dep’n – Vehicle 4000 31/12/15 Profit and loss summary 4000
4000 4000
Accumulated Depreciation – Vehicle
31/12/15 Depreciation – Vehicle 4000

9. VCE ACCOUNTING
UNIT 3 – RECORDING AND REPORTING FOR A TRADING BUSINESS
CHAPTER 13 – DEPRECIATION OF NON-CURRENT ASSETS
© Michael Allison, Trinity Grammar School.
Author’s permission required for external use
Page | 9
19. The annual depreciation expense being allocated for the vehicle is:
a) $4,000
b) $3,500
c) $6,000
d) $8,000
20. At 31 December 2016 the carrying value of the vehicle will be:
a) $29,000
b) $27,000
c) $25,000
d) $31,000
21. The straight-line depreciation percentage rate being charged is:
a) 10.8%
b) 9.5%
c) 21.6%
d) 16.2%
22. Given an estimated useful life of five years, the estimated residual value of the vehicle is:
a) $6,000
b) $9,000
c) $7,000
d) $8,000
The following information has been extracted from the records of a small business.
Equipment
1/1/15 Cash at bank 18000
Depreciation – Equipment
30/6/15 Acc. dep’n – Equipment 2100 30/6/15 Profit and loss summary 2100
2100 2100
30/6/16 Acc. dep’n – Equipment 4200 30/6/16 Profit and loss summary 4200
4200 4200
Accumulated Depreciation – Equipment
30/6/15 Depreciation – Equipment 2100
30/6/16 Balance 6300 30/6/16 Depreciation – Equipment 4200
6300 6300
1/7/16 Balance 6300

10. VCE ACCOUNTING
UNIT 3 – RECORDING AND REPORTING FOR A TRADING BUSINESS
CHAPTER 13 – DEPRECIATION OF NON-CURRENT ASSETS
© Michael Allison, Trinity Grammar School.
Author’s permission required for external use
Page | 10
23. The carrying value of the equipment at the following dates is:
30 June 2015 30 June 2016
a) $18,000 $15,900
b) $15,900 $11,700
c) $15,900 $13,800
d) $2,100 $6,300
24. The carrying value of the equipment at 30 June 2017 will be:
a) $7,500
b) $10,500
c) $5,400
d) $18,000
25. If the original estimate of the equipment’s residual value was $1,200, the useful life was
estimated as being:
a) 5 years
b) 4 years
c) 3 years
d) 6 years