TUTORIAL TOPIC 5

Multiple-choice Question (Choose one correct answer.)

1. Which of the assets below is a non-current asset?

A. Trade receivables
B. Inventory
C. Goodwill
D. Cash in bank

2. The statement which represents the economic value of assets decreasing each year is
____________.
A. asset revaluation
B. tangible asset
C. current asset
D. amortization

3. The main consideration when calculating depreciation includes ______________.

A. the cost of the non-current asset and its useful life
B. the scrap value and previous depreciation
C. the purchasing date and accumulated depreciation
D. the economic usage over a specific period

4. Which of the following shows the calculation of net book value of an asset?
A. Cost of asset acquired plus depreciation
B. Cost of asset acquired minus depreciation
C. Cost of asset plus accumulated depreciation
D. Cost of asset minus accumulated depreciation

5. Depreciation is caused by the following situations, except

A. obsolete technology
B. obsolescence (physical)
C. improvement of the asset
D. frequent usage of the asset

6. Profit from disposal is gained when the ______

A. net book value of the asset is greater than the selling price
B. exchange value of the asset is lesser than the net book value
C. exchange value of the asset is greater than the net book value
D. net book value of the asset is greater than the exchange value

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7. A motor vehicle at the cost of RM30,000 with depreciation expenses of RM5,000 per
year can be used for ______ years.
A. three
B. four
C. five
D. six

8. Green Ltd sold an equipment when the book value was RM2,300. If the company wishes
to gain profit from sales at RM800, what should be the selling price?
A. RM1,500
B. RM3,100
C. RM4,000
D. RM4,500

9. The financial information below were extracted from Rosie Bhd as at 1 January 2025.

Machine (at cost) = RM50,000

Net book value = RM44,000
Depreciation rate = 12% at reducing balance method
What is the depreciation on 31 December 2025?

A. RM6,000
B. RM5,850
C. RM5,280
D. C RM6,400

10. 10 A building which costs RM150,000 is acquired on 2 June 2025. The building
depreciates at 15% per year, using reducing balance. What is the accumulated
depreciation of the building on 31 December 2027?
A. RM51,108
B. RM52,540
C. RM58,125
D. RM67,500

Short Answer Questions

1. Assets can be divided into two, non-current asset and current asset. Give the differences
between the two.

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 2. List three intangible assets.

3. What are the differences between tangible and intangible asset? Give an example for each
type.

4. List examples of assets that can be included in property, machine and equipment.

5. Why do non-current assets depreciate?

6. Between the straight line and reducing balance method, which one gives the higher
accumulated depreciation and why?

7. When an asset is sold, the company must prepare a disposal account. What kind of
information concludes that account?

8. What is the value for a vehicle with a cost of RM10,000 and useful life of 5 years?

9. A motorcycle was purchased on 1 July 2025 at the cost of RM8,000 and is depreciated
using reducing balance at 10% per annum. Based on time, find the accumulated
depreciation until 31 December 2026.

10. Assume that a machine is bought on 12 January 2025 at the cost of RM15,000 and
depreciates at the rate of 15% annually. Calculate the depreciation expense for the year
2025 if the following is used.

(a) Full depreciation in the year of purchase and no depreciation in the year of sales.
(b) Full depreciation in the year of sales and no depreciation in the year of purchase.

Problem-solving Questions

1. A machine is acquired on 1 August 2025 at the cost of RM80,000. Additional

transportation cost of RM2,000 is incurred to ensure the machine is in good condition for
business. All transactions are in cash.

You are required to answer the following:

(a) What is the cost of the machine?

(b) Prepare relevant entries.

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2. Queen Bhd bought land at the cost of RM300,000 and increased the assets of the company.
Various expenses were incurred such as legal fees (RM10,000) and wages to clean the land
(RM3,000). Wood from the land was sold at RM5,400.

You are required to answer the following:

(a) What is the cost of the land?

(b) Prepare relevant entries.

3. Office furniture is purchased on 30 June 2025 at the cost of RM30,200. Payment by cheque
is made on the same day. It depreciates at 12% per annum using straight line.

You are required to prepare:

(a) the furniture account, and

(b) the accumulated depreciation account as on 31 December 2026.

4. A motor vehicle is acquired on 1 April 2025 and the cost reported is RM231,000. Another
vehicle is acquired on 1 January 2026 at the cost of RM54,000. A vehicle acquired in 2025
is sold at RM167,000 on 30 November 2026. The vehicle depreciates 15% per annum by
reducing balance.

You are required to prepare the journal entries to record the transactions as at 31 December
2026.

5. On January 2020, Syarikat Kayu Jati purchases a machine for RM249,000. Installation cost
involved amounted to RM11,000. The estimated useful economic life of the machine was
eight years. Syarikat Kayu Jati uses the straight-line method at the rate of 20 percent for
the calculation of depreciation.

Early 2020, the company purchases motor vehicle at RM72,000 by cheque. The business
estimates that the motor vehicle will be used for ten years and its trade-in value at the point

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is estimated as being RM4,000. Another motor vehicle was bought on April 2022 on credit from
TAZA Ria at RM45,000 and will be used for seven years. The company depreciate motor vehicle
using reducing balance method at the rate of 10 percent.

The company policy is to provide full depreciation in the year of purchase and none in the year of
sale.

Required:

(a) Calculate the depreciation expenses on machine and motor vehicle of Syarikat Kayu Jati
as at 31 December 2022.

(b) Prepare the following account of Syarikat Kayu Jati for the year ended 31 December 2022:
i. Machine
ii. Motor Vehicle
iii. Accumulated depreciation of machine
iv. Accumulated depreciation of motor vehicle

[Trimester 2, 2022/2023]

6. Aisyah Hijanah is a sole trader who maintains her non-current assets at cost. On 31 August
2022, she owned the following non-current assets which had been depreciated on a yearly
basis.

Non-current Assets Cost (RM) Provision for

Depreciation (RM)
Motor Vehicles 70,000 23,800
Fixtures and Fittings 40,000 8,000

During the year ended 31 August 2023, motor vehicles costing RM15,000 and fixtures and fittings
costing RM6,000 were purchased. The motor vehicles are depreciated at 20% per annum using the
reducing balance method and the fixtures and fittings are depreciated at 10% per annum using the
straight-line method. All purchases of assets are paid by cheques.

Required:

(a) List any FIVE (5) causes of depreciation.

[5 marks]

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(b) Prepare the motor vehicles account and fixtures and fittings account for the year ended 31
August 2023.
[4 marks]

(c) Calculate the depreciation for the year ended 31 August 2023 for motor vehicles and fixtures
and fittings.
[4 marks]

(d) Prepare the journal entries for annual depreciation of motor vehicles and fixtures and fittings
for the year ended 31 August 2023 based on the figures you have calculated in (c) above.
[4 marks]

(e) Prepare the provision for depreciation accounts for motor vehicles and fixtures and fittings
for the year ended 31 August 2023.
[4 marks]

(f) Prepare an extract of the balance sheet as at 31 August 2023.

[4 marks]

[Trimester 2 2023/2024]

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7. Beta Trading with a financial year end of 31 December provides depreciation on its office
furniture at 10% per annum using straight line method. It is the policy of the business to
calculate depreciation expense based on month-to-month basis from the date of acquisition
to the date of disposal. Beta Trading provided the following information:

Date Detail
1 January 2021 Purchased office furniture (Set 1) for RM5,000 by issuing a cheque.
30 September 2023 Purchased office furniture (Set 2) for RM8,000 paying in a cash.
30 June 2024 Purchased office furniture (Set 3) for RM15,000 on credit from
Modern Furnishings.
Beta Trading has trade-in office furniture (Set 1) to Modern
Furnisihing for RM1,000 which is to be treated a part of payment
towards office furniture (Set 3).

Required:

(a) Calculate the depreciation expenses for the years ending 31 December 2021 to 2024.

(b) Prepare the ledger account for each of two years ended 31 December 2023 and 2024.

(i) Office furniture account

(ii) Accumulated depreciation accounts

(iii) Disposal account for office furniture

(c) Distinguish between TWO (2) differences capital expenditures and revenue expenditures.
provide ONE (1) appropriate example for each type of expenditure.

[Trimester 3 2023/2024]