ACCA FA Non-current Assets, Depreciation & Intangibles Practice Questions
Non-current Assets, Depreciation & Intangibles makes up 7 of every 50 questions on a Tigertest ACCA FA practice test. Here are 10 of the 28 questions on it, each with the answer and the reason.
Updated by the Tigertest team. Based on ACCA's FA syllabus and study guide for 2026-27, with IFRS 18 formats. Original Section A style questions; Section B not included. Not affiliated with ACCA.
1. Which of these is capital expenditure?
- A.Servicing a delivery van
- B.Installing air conditioning in an office
- C.Repainting the office walls
- D.Repairing a broken window
Answer: B. Capital expenditure buys or improves a non-current asset for use over more than one period. Repairs, redecoration and servicing maintain assets and are expenses.
2. Which cost should be capitalised as part of the cost of a new machine?
- A.Its annual maintenance contract
- B.Insurance once it is in use
- C.Training staff to use it
- D.Delivery and installation
Answer: D. IAS 16 cost includes the purchase price and costs directly attributable to bringing the asset to working condition, such as delivery and installation. Training and running costs are expensed.
3. A machine has a list price of $42,000 and the supplier gives a 5% trade discount. Delivery costs $1,300, installation $2,200 and a one-year maintenance contract $900. Recoverable sales tax of $7,980 is charged. The machine's cost is:
- A.$43,400
- B.$51,380
- C.$44,300
- D.$45,500
Answer: A. Cost = $39,900 + $1,300 + $2,200 = $43,400. The maintenance contract is an expense, and recoverable sales tax is claimed back, so neither is capitalised.
4. An asset costing $36,000 was bought on 1 April. It has a residual value of $4,800 and a useful life of six years. Depreciation is straight line and time-apportioned, with a 31 December year end. The charge for the first year is:
- A.$4,500
- B.$6,000
- C.$3,900
- D.$5,200
Answer: C. Annual charge = ($36,000 - $4,800) / 6 = $5,200. The asset was used for nine months, so $5,200 x 9/12 = $3,900.
5. A vehicle cost $25,000 and is depreciated at 30% a year on the reducing balance. The depreciation charge in its third year is:
- A.$7,500
- B.$8,575
- C.$3,675
- D.$5,250
Answer: C. Year 1: $7,500, leaving $17,500. Year 2: $5,250, leaving $12,250. Year 3: 30% x $12,250 = $3,675. $8,575 is the carrying amount left after year 3.
6. Reducing balance depreciation is most suitable for an asset that:
- A.Gives more benefit in its early years
- B.Has no residual value
- C.Is held for its rental income
- D.Is used evenly over its life
Answer: A. Reducing balance charges more depreciation early, matching assets such as vehicles and computers that are most productive or lose value fastest when new. Even use suits straight line.
7. A van that cost $28,000 has accumulated depreciation of $17,500. It is sold for $12,300. The result on disposal is:
- A.Loss of $15,700
- B.Loss of $1,800
- C.Gain of $12,300
- D.Gain of $1,800
Answer: D. Carrying amount is $28,000 - $17,500 = $10,500. Proceeds of $12,300 exceed it by $1,800, a gain in profit or loss.
8. A car that cost $18,000, with accumulated depreciation of $11,200, is part-exchanged for a new car. The dealer allows $7,500 for the old car. The result on disposal of the old car is:
- A.Loss of $11,200
- B.Gain of $700
- C.Loss of $700
- D.Gain of $7,500
Answer: B. The part-exchange allowance is the disposal proceeds. Carrying amount is $18,000 - $11,200 = $6,800, so $7,500 - $6,800 = a $700 gain.
9. A new lorry is bought by trading in an old lorry, for which the dealer allows $9,000, and paying $45,000 in cash. The cost of the new lorry recorded in the ledger is:
- A.$9,000
- B.$54,000
- C.$45,000
- D.$63,000
Answer: B. The new asset's cost is the full price, $54,000: cash $45,000 plus the $9,000 allowance, which is the value given up in the old lorry. The allowance is also the old lorry's disposal proceeds.
10. A building cost $430,000 and has accumulated depreciation of $86,000. It is revalued to $525,000. The revaluation surplus is:
- A.$525,000
- B.$86,000
- C.$95,000
- D.$181,000
Answer: D. Surplus = valuation - carrying amount = $525,000 - ($430,000 - $86,000) = $181,000. The accumulated depreciation is eliminated on revaluation.
Practice all 28 non-current assets, depreciation & intangibles questions, and the rest of the 200-question bank, in the free ACCA FA training sets. Questions you miss come back until you have mastered them.
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