* To simplify the scenario, this regional office building is managed independently, and the accounting is similar to a small independent not-for-profit organisation.

** Expenses such as supplies, utilities and salaries are all covered by the headquarters and not part of this scenario

*** The departments accounting policy on asset requires that any individual asset valued at over $10k be recorded as a capital asset and below $10k be expensed according to the Directive on Accounting Standards: GC 3150 Tangible Capital Assets (canada.ca).

**** Amortization is calculated using the straight-line method.

Event 1: Last winter, the heating was often failing in the regional office and the facilities manager decided to acquire a new furnace. The old one was expected to last another 4 years but has failed to reach the end of its useful life. At the time, it still had a value of 4000$ and the annual amortisation set at 1000$ per year. The cost of the new one is $124000.00 and is expected to last for 25 years, after which it is expected to have no residual value.

Event 2: The office administrator got permission from Crown Asset Disposal to sell off a lot of old chairs and desks that are no longer needed as people are mostly working remotely. They sold for $4000.00 and the Invoice has been settled. These chairs and desks were all individually purchased at prices below $10k.

Event 3: With more individuals working remotely, it was decided to make some office improvements and some space was converted into highly functional meeting and training rooms. With the new design, it was decided to also refresh the office paint scheme to match. The new facilities were built at a cost of $65000.00 and the paint for the rest of the office was $3000.00. The department owns the building. It was acquired new 30 years ago and fully amortized. Its estimated that this will extend the buildings life expectancy by another 10 years. What will be the combined balance of the Asset account after all has been recorded?

a $195'000

b $192'000

c $189'000

d $193'000

6.What is going to be the Closing balance for amortization expense for the year ended March 31, 2024

a $11'460

b $12'460

c $16'460

d No amortisation after first year of use

7.The chairs being disposed of were capitalised when originally purchased. What is the impact on the financial statement?

a) Asset understated and cash overstated.

b) Expenses overstated and cash understated.

c)Revenue overstated and expenses understated.

d) Asset overstated and expenses understated. No impact