FAC1502: FINANCIAL ACCOUNTING CONCEPTS;
PROCEDURES AND CONCEPTS ALL REVISION QUESTIONS
AND CORRECT ANSWERS (GRADED 100%) (2024 UPDATE).
At the end of each period the asset account is balanced and reconciled with the amount in the asset
register.
THE CONCEPT OF DEPRECIATION - ANSWER- The systematic allocation of the
depreciable amount of an asset over its useful life.
RECORDING DEPRECIATION - ANSWER- Debit (Dr) depreciation expense, credit (Cr)
accumulated depreciation
NET CARRYING AMOUNT - ANSWER- Debit balance of asset - Credit balance on the
accumulated depreciation
METHODS OF CALCULATING DEPRECIATION - ANSWER- 1. Straight-line method
2. Diminising Balance method
3. Production Unit method
METHODS OF CALCULATING DEPRECIATION : STRAIGHT-LINE METHOD - ANSWER-
Cost price/Lifespan in Years
METHODS OF CALCULATING DEPRECIATION : DIMINISHING METHOD - ANSWER-
A fixed % of the carrying amount is written off x cost price
METHODS OF CALCULATING DEPRECIATION : PRODUCTION UNIT METHOD -
ANSWER- Units produced during the year/expected number of units to be produced over life
span
DISPOSAL OF PROPERTY; PLANT AND EQUIPMENT - ANSWER- -Occurs when asset is
sold, traded, or discarded
-Update depreciation to the date of disposal and calculate gain or loss
- A gain occurs when the selling price of the asset exceeds its book value
- A loss occurs when the selling price of the asset is less than its book value
-Gain or loss is reported in the Other Income or Expense category of the Income Statement
PRO RATA DERECIATION - ANSWER- When an asset is sold before the end of its expected
life span and during the financial; the pro rata depreciation for the period from the beginning of
the financial year up to the date of sale must be take into account as part of the accumulate
depreciation.
, DISPOSAL OF AN ASSET: RECORD THE DEPRECIATION OF THE CURREN PERIOD
UNTIL THE DATE OF DISPOSAL - ANSWER- Depreciation - Dr (Debit) ; Accumulated
Depreciation Cr (Credit)
DISPOSAL OF AN ASSET: TRANSFER TOTAL ACCUMULAED DEPRECIATION TO
REALISATION ACCOUNT - ANSWER- Accumulated Depreciation - Dr (Debit); Realisation
Account - Cr (Credit)
DISPOSAL OF AN ASSET: TRANSFER THE COST PRICE OF THE DISPOSED ASSET TO
THE REALISATION - ANSWER- Realisation Account - Dr (Debit); Particular Asset Account
- Cr (Credit)
RECORD THE AMOUNT EARNED ON THE REALISATION: SOLD FOR CASH (CRJ) -
ANSWER- Bank - Dr (Debit); Realisation Account - Cr (Credit)
RECORD THE AMOUNT EARNED ON THE REALISATION: SOLD ON CREDIT -
ANSWER- Trade Receivables - Dr (Debit) ; Realisation Account - Cr (Credit)
RECORD ASSET TRADED IN - ANSWER- Asset Account - Dr (Debit); Realisation Account
- Cr (Credit)
DETERMINE THE PROFIT OR LOSS ON THE DISPOSED ASSET - ANSWER- 1. Loss =
The debit side of the realisation is bigger.
2. Profit = The credit side of the realisation is smaller.
DETERMINE THE PROFIT OR LOSS ON THE DISPOSED ASSET: TRANSFER THE PROFIT
TO THE PROFIT OR LOSS ACCOUNT ON DISPOSAL OF ASSET - ANSWER- Realisation
Account - Dr (Debit); Profit on Disposal...Account - Cr (Credit)
DETERMINE THE PROFIT OR LOSS ON THE DISPOSED ASSET: TRANSFER THE PROFIT
TO THE LOSS ACCOUNT ON DISPOSAL OF ASSET - ANSWER- Loss on Disposal of ...
Account - Dr (Debit); Realisation Account - Cr (Credit)
INTANGIBLE ASSETS - ANSWER- Non-monetary assets without physical substance held
for use in the production or supply of goods or services. Controlled by an entity as a result of past
events and from which future economic benefits are expected to flow to the entity.
TYPES OF OTHER FINANCIAL ASSETS & METHOD OF RECORDING THEM: CASH
INVESTMENTS - ANSWER- Invest in the most profitable way. Obtain the highest yield or
earn the best return on its investment. Savings account; Call deposits; Fixed deposits
TYPES OF OTHER FINANCIAL ASSETS & METHOD OF RECORDING THEM:
INVESTMENT IN SHARES - ANSWER- Purchase of shares in a company. The investment
return on shares is called dividends. Dividends are received only if the company which issued the
shares declares a dividend. Shown as a % of the nominal value of the shares or as a cents per share.
PROCEDURES AND CONCEPTS ALL REVISION QUESTIONS
AND CORRECT ANSWERS (GRADED 100%) (2024 UPDATE).
At the end of each period the asset account is balanced and reconciled with the amount in the asset
register.
THE CONCEPT OF DEPRECIATION - ANSWER- The systematic allocation of the
depreciable amount of an asset over its useful life.
RECORDING DEPRECIATION - ANSWER- Debit (Dr) depreciation expense, credit (Cr)
accumulated depreciation
NET CARRYING AMOUNT - ANSWER- Debit balance of asset - Credit balance on the
accumulated depreciation
METHODS OF CALCULATING DEPRECIATION - ANSWER- 1. Straight-line method
2. Diminising Balance method
3. Production Unit method
METHODS OF CALCULATING DEPRECIATION : STRAIGHT-LINE METHOD - ANSWER-
Cost price/Lifespan in Years
METHODS OF CALCULATING DEPRECIATION : DIMINISHING METHOD - ANSWER-
A fixed % of the carrying amount is written off x cost price
METHODS OF CALCULATING DEPRECIATION : PRODUCTION UNIT METHOD -
ANSWER- Units produced during the year/expected number of units to be produced over life
span
DISPOSAL OF PROPERTY; PLANT AND EQUIPMENT - ANSWER- -Occurs when asset is
sold, traded, or discarded
-Update depreciation to the date of disposal and calculate gain or loss
- A gain occurs when the selling price of the asset exceeds its book value
- A loss occurs when the selling price of the asset is less than its book value
-Gain or loss is reported in the Other Income or Expense category of the Income Statement
PRO RATA DERECIATION - ANSWER- When an asset is sold before the end of its expected
life span and during the financial; the pro rata depreciation for the period from the beginning of
the financial year up to the date of sale must be take into account as part of the accumulate
depreciation.
, DISPOSAL OF AN ASSET: RECORD THE DEPRECIATION OF THE CURREN PERIOD
UNTIL THE DATE OF DISPOSAL - ANSWER- Depreciation - Dr (Debit) ; Accumulated
Depreciation Cr (Credit)
DISPOSAL OF AN ASSET: TRANSFER TOTAL ACCUMULAED DEPRECIATION TO
REALISATION ACCOUNT - ANSWER- Accumulated Depreciation - Dr (Debit); Realisation
Account - Cr (Credit)
DISPOSAL OF AN ASSET: TRANSFER THE COST PRICE OF THE DISPOSED ASSET TO
THE REALISATION - ANSWER- Realisation Account - Dr (Debit); Particular Asset Account
- Cr (Credit)
RECORD THE AMOUNT EARNED ON THE REALISATION: SOLD FOR CASH (CRJ) -
ANSWER- Bank - Dr (Debit); Realisation Account - Cr (Credit)
RECORD THE AMOUNT EARNED ON THE REALISATION: SOLD ON CREDIT -
ANSWER- Trade Receivables - Dr (Debit) ; Realisation Account - Cr (Credit)
RECORD ASSET TRADED IN - ANSWER- Asset Account - Dr (Debit); Realisation Account
- Cr (Credit)
DETERMINE THE PROFIT OR LOSS ON THE DISPOSED ASSET - ANSWER- 1. Loss =
The debit side of the realisation is bigger.
2. Profit = The credit side of the realisation is smaller.
DETERMINE THE PROFIT OR LOSS ON THE DISPOSED ASSET: TRANSFER THE PROFIT
TO THE PROFIT OR LOSS ACCOUNT ON DISPOSAL OF ASSET - ANSWER- Realisation
Account - Dr (Debit); Profit on Disposal...Account - Cr (Credit)
DETERMINE THE PROFIT OR LOSS ON THE DISPOSED ASSET: TRANSFER THE PROFIT
TO THE LOSS ACCOUNT ON DISPOSAL OF ASSET - ANSWER- Loss on Disposal of ...
Account - Dr (Debit); Realisation Account - Cr (Credit)
INTANGIBLE ASSETS - ANSWER- Non-monetary assets without physical substance held
for use in the production or supply of goods or services. Controlled by an entity as a result of past
events and from which future economic benefits are expected to flow to the entity.
TYPES OF OTHER FINANCIAL ASSETS & METHOD OF RECORDING THEM: CASH
INVESTMENTS - ANSWER- Invest in the most profitable way. Obtain the highest yield or
earn the best return on its investment. Savings account; Call deposits; Fixed deposits
TYPES OF OTHER FINANCIAL ASSETS & METHOD OF RECORDING THEM:
INVESTMENT IN SHARES - ANSWER- Purchase of shares in a company. The investment
return on shares is called dividends. Dividends are received only if the company which issued the
shares declares a dividend. Shown as a % of the nominal value of the shares or as a cents per share.
