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CHAP 1 : ACCOUNTING FOR NON-CURRENT ASSET

CHAP 1 : ACCOUNTING FOR NON-CURRENT ASSET. SPESIFIC OUTCOME : Understand non-current asset Understand the concept of depreciation Understand methods of depreciation Prepare the accounting record for non-current asset. ACCOUNTING FOR NON-CURRENT ASSET.

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CHAP 1 : ACCOUNTING FOR NON-CURRENT ASSET

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  1. CHAP 1 : ACCOUNTING FOR NON-CURRENT ASSET SPESIFIC OUTCOME : Understand non-current asset Understand the concept of depreciation Understand methods of depreciation Prepare the accounting record for non-current asset

  2. ACCOUNTING FOR NON-CURRENT ASSET

  3. Determining & Recording Non Current Asset Cost Based on MFRS 116 – refer pg 3

  4. Depreciation Depreciation vs amortization vs Depletion Methods of Depreciation Straight Line/Reducing Balance / Sum of Years Digit/ Units of Production Method

  5. EXAMPLE 1.6 ( pg 14 ): An equipment bought on 1 Jan 2003 RM40,000, depreciated 10% straight line method was SOLD at RM16,000 on 31 Dec 2008. AD is RM 24,000. Journal entry : 31/12/08 Dr Cash RM16,000 Accu. Depre RM 24,000 Cr Equipment RM 40,000

  6. EXAMPLE 1.7 ( pg 14 ): An equipment bought on 1 Jan 2003 RM40,000, depreciated 10% straight line method was SOLD at RM20,000 on 31 Dec 2008. AD is RM 24,000. Journal entry : 31/12/08 Dr Cash RM20,000 Accu. Depre RM 24,000 Cr Equipment RM 40,000 P&L ( gain from disposal)RM4,000

  7. Refer your text book Eg 1.9 pg 15

  8. Example 1.12 pg 22 : Mermaid Ltd bought a TRAILER on 30/4/2006 RM 130,000 in cash. The trailer than was exchanged with a LORRY valued at RM 88,000 On 1/7/2008. The exchanged value is RM 74,500 and the remaining balance paid by cheque. The company policy is to depreciate vehicle with STRIGHT LINE METHOD AT 18% PER YEAR. The financial year of the company is at 31 Dec every year. Calculate the depreciation and prepare ledger entries at at 31 Dec 2008 for the following situation : Term Basis Monthly Basis FDP, NDD NDP, FDD

  9. c. FDP, NDD d. NDP, FDD Refer the summary in your text book.

  10. Example 1.12 pg 22 : ( SAME EXAMPLE, DIFFERENT METHOD ) Mermaid Ltd bought a TRAILER 30/4/2006 RM 130,000 in cash. The trailer than was exchanged with a LORRY valued at RM 88,000 On 1/7/2008. The exchanged value is RM 74,500 and the remaining Balance paid by cheque. The company policy is to depreciate vehicle with REDUCING BALANCE METHOD AT 18% PER YEAR. The financial year of the company is at 31 Dec every year. Calculate the depreciation and prepare ledger entries at at 31 Dec 2008 for the following situation : Term Basis Monthly Basis FDP, NDD NDP, FDD

  11. Example 1.13 pg 26 : The following is the information on the equipment owned by Company ABC on 31 deC 2007 : Equipment RM 100,000 Accudeprec( 30,000 ) 70,000 On 31 March 2008, an equipment bought on 1April 2006 RM 30,000 Is exchanged with a new equipment valued at RM 26,000. The Exchange value is RM 18,000. Depreciation for the equipment Is 15% per year ( STRAIGHT LINE METHOD ). Prepare the relevant ledger on 31 Dec 2008 :

  12. Example 1.14 pg 28 : The following is the information on the equipment owned by Company ABC on 31 deC 2007 : Equipment RM 100,000 Accudeprec( 30,000 ) 70,000 On 31 March 2008, an equipment bought on 1April 2006 RM 30,000 Is exchanged with a new equipment valued at RM 26,000. The Exchange value is RM 18,000. Depreciation for the equipment Is 15% per year ( REDUCING BALANCE METHOD ). Prepare the relevant ledger entries on 31 Dec 2008 :

  13. Full Accudepre RM30,000 – accudepre for disposed aset RM7369 = 22,631 • Cost 70,000 • Accudepre(22,631) • NBV 08 47,369 • - Depre (08) 15% (7105) • 40,264 Improve Your understanding … Solve Q1 – Q3

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