CIMA Fundamentals of financial accounting BA3 Question # 68 Topic 7 Discussion

CIMA Fundamentals of financial accounting BA3 Question # 68 Topic 7 Discussion

BA3 Exam Topic 7 Question 68 Discussion:
Question #: 68
Topic #: 7

XYZ's computerized accounting system automatically updates the non-current asset register when additions to property, plant and equipment are made A machine costing $120,000, with a useful life of five years and an estimated residual value of $12,000 is acquired at the year end.

Which of the following statements is correct in relation to the recording of this asset in the non-current asset register?


A.

The journal entry to record the cost is Dr Asset $120,000 and Cr Bank $120,000 The five year useful life is recorded


B.

There is no journal entry but the cost of $120,000, the five year useful life and estimated residual value of $12 000 are recorded


C.

There is no journal entry but the cost of $120,000 and the five year useful life are recorded


D.

The journal entry to record the cost is Dr Asset $120,000 and Cr Bank $120,000 The five year useful life and estimated residual value of $12,000 are recorded


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