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
Non Current Asset/Fixed Asset
Tangible Asset/PPE
Example ?
Intangible Asset
Example?
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. DISPOSAL OF ASSET SELLING THE ASSET EXCHANGING WITH OTHER ASSET
GIVEN TO THE OTHER PARTY
DESTROYED IN DISASTER

6. 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 AD is RM 24,000.
Journal entry :
31/12/08 Dr Cash RM16,000
Accu. Depre RM 24,000
Cr Equipment RM 40,000

7. 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 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

8. Depreciation Convention
Term Basis
Monthly Basis
Full Depreciation In The Year of Purchase, No Depreciation In The Year Of Disposal
No Depreciation In The Year of Purchase, Full Depreciation In The Year of Dispsal

9. Refer your text book
Eg 1.9 pg 15

10. 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

11. TERM BASIS & MONTHLY BASISFY
TRAILER
LORRY
DEPRE.
30/4/2006 RM130,000
1/7/ RM88,000
2006
18% X 130,000 X 8/12
15,600
2007
18% X 130,000
23,400
2008
18% X 130,000 X 6/12
11,700
18% X 88,000 X 6/12
7920
19,620
ACCU.DEPRE
50,700

12. VEHICLE A/C
2008
1-Jan
Bal b/f
130000
1-Jul
Disposal
Disposal (lorry)
74500
31-Dec
Bal cf
88000
Bank
13500
218000

13. ACCUMULATED DEPRECIATION
1-Jul
Disposal
50,700
1-Jan
Bal bf
39,000
31-Dec
Bal cf
7,920
Depre (current yr)
19,620
58,620
DISPOSAL A/C
1-Jul
Vehicle
130000
74500
Accu Depre
50,700
P&L ( loss from disposal)
4,800

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

15. 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

16. TERM BASIS & MONTHLY BASIS – REDUCING BALANCE METHODFY
TRAILER
LORRY
DEPRE.
30/4/2006 RM130,000
1/7/ RM88,000
2006
18% X 130,000 X 8/12
15,600
 NBV
114,400 
2007
18% X 114,400
20,592
93,808 
2008
18% X 93,808 X 6/12
8,443
18% X 88,000 X 6/12
7920
16,363
ACCU.DEPRE
44,635

17. VEHICLE A/C
2008
1-Jan
Bal b/f
130000
1-Jul
Disposal
Disposal (lorry)
74500
31-Dec
Bal cf
88000
Bank
13500
218000

18. ACCUMULATED DEPRECIATION
1-Jul
Disposal
44,635
1-Jan
Bal bf
36,192
31-Dec
Bal cf
7,920
Depre (current yr)
16,363
52,555
DISPOSAL A/C
1-Jul
Vehicle
130000
74500
Accu Depre
44,635
P&L ( loss from disposal)
10,865

19. Extract of Balance Sheet
Extract of P&L
Depre
16,363
Loss from disposal
10,865
Extract of Balance Sheet
Non Current Asset :
Vehicle
88,000
(-)
Accu Depre
(7,920)
80,080

20. 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
Accu deprec ( 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 :

21. SOLUTION : FY
OLD EQUIPMENT
NEW EQUIP
BALANCE OF EQUIP
DEPRE.
1/4/2006 RM30,000
31/3/ RM26,000
RM100k-disposed RM30k
RM 70,000 06
15% X 30,000 X 9/12
3,375 07
15% X 30,000
4,500 08
15% X 30,000 X 3/12
1,125
15% X 26,000 X 9/12
2,925
15% X 70,000
10,500
14,550
ACCU.DEPRE
9,000

22. EQUIPMENT A/C
2008
1-Jan
Bal b/f
100,000
31/3
Disposal
30,000
18,000
31-Dec
Bal cf
96,000
cASH
8,000
126,000

23. ACCUMULATED DEPRECIATION
31/3
Disposal
9,000
1-Jan
Bal bf
30,000
31-Dec
Bal cf
35,550
Depre (current yr)
14,550
44,550
DISPOSAL A/C
31/3
Equipment
30,000
31/3l
18,000
Accu Depre
9,000
P&L ( loss from disposal)
3,000

24. 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
Accu deprec ( 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 :

25. SOLUTION : FY OLD EQUIPMENT NEW EQUIP BALANCE OF EQUIP DEPRE.
NEW EQUIP
BALANCE OF EQUIP
DEPRE.
1/4/2006 RM30,000
31/3/ RM26,000
RM100k-disposed RM30k
RM 70,000 06
15% X 30,000 X 9/12
3,375
NBV
26,625 07
15%X 26,625
3994
22,631
70000-AD FOR DISPOSED ASSET 08
15% X X 3/12
849
15% X 26,000 X 9/12
2,925
15% X 47,369
7105
3774
21782
23,075
40,264
ACCU.DEPRE
8218

26. Improve Your understanding …
Full Accu depre RM30,000 – accu depre for disposed aset RM7369
= 22,631
Cost 70,000
Accu depre (22,631)
NBV ,369
- Depre (08) 15% (7105)
40,264
Improve Your understanding …
Solve Q1 – Q3