Show non-current assets in financial statements
Connect depreciation, revaluation and disposal entries to period profit and the statement of financial position.
Cambridge International AS & A Level Accounting 9706, 2026–2028 syllabus, Version 2. These lessons cover Topic 1.3 only. Practice is self-checked, not an official Cambridge grade; the separately published 2029 syllabus, timed papers and human subject-teacher review remain outstanding.
Before you begin
- Topics 1.1 and 1.2 introduce business resources, equity, double entry and period profit. Use those ideas when recording non-current assets.
Work on paper. Try each question before revealing help, and explain why your method works.
Quick readiness check
Cost is $10,000 and accumulated depreciation is $6,000. What is carrying amount before impairment?
What you will learn
- Show depreciation expense in profit or loss
- Show cost and accumulated depreciation in the position statement
- Explain disposal and revaluation effects without treating them as cash
Depreciation affects both statements
The current-period depreciation charge is an expense in the statement of profit or loss. Accumulated depreciation is deducted from cost, or otherwise reflected under the adopted presentation, to show the carrying amount in the statement of financial position.
This is why the charge changes profit and the reported asset balance, even though the depreciation journal does not itself change cash.
Disposal and revaluation are different events
A disposal removes the asset and its accumulated depreciation, records proceeds and recognises any gain or loss. The cash or receivable comes from the buyer; the gain or loss is the comparison with carrying amount.
Revaluation changes the carrying amount while the business continues to hold the asset. It is not a disposal or cash inflow. Explain the measurement basis and apply the relevant treatment.
Pause and explain
A $2,500 depreciation charge is recorded. Which two balances normally change?
Worked example
An asset has cost $30,000, opening accumulated depreciation $18,000 and current depreciation $3,000. State the current expense and closing carrying amount before impairment.
Show the worked solution
- Current depreciation expense is $3,000.
- Closing accumulated depreciation = 18,000 + 3,000 = $21,000.
- Closing carrying amount = 30,000 − 21,000 = $9,000.
Answer Charge $3,000 depreciation to profit or loss. Show cost $30,000 less accumulated depreciation $21,000, giving carrying amount $9,000 before impairment.
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Test this topic →From guided practice to a new situation
Write your answer and reasoning first. Use a hint only if you are stuck. The model solution is for self-checking; your written work is not automatically marked.
A business has equipment cost of $42,000, opening accumulated depreciation $25,000 and a $5,000 charge for the year. Find the closing carrying amount.
Give me a hint
Update accumulated depreciation first.
Compare my reasoning
- Closing accumulated depreciation = 25,000 + 5,000 = $30,000.
- Carrying amount = 42,000 − 30,000.
- Show the $5,000 charge as expense in profit or loss.
Closing carrying amount is $12,000; current depreciation expense is $5,000.
Look for these in your work
- Accumulated total correct
- Carrying amount correct
- Expense effect stated
An asset is sold for $11,000 when carrying amount is $13,000. State the cash effect and profit-or-loss effect.
Give me a hint
The receipt and disposal result are separate amounts.
Compare my reasoning
- Cash increases by the $11,000 proceeds, assuming immediate payment.
- Disposal loss = 11,000 − 13,000 = −$2,000.
- The loss reduces profit; it is not the $11,000 cash receipt.
Cash rises by $11,000 and a $2,000 loss on disposal reduces profit. These are distinct effects.
Look for these in your work
- Cash proceeds stated
- Loss calculated
- Effects separated
A building is revalued upward by $50,000. It is then sold for $1,000,000. Why is the $50,000 not automatically added to the cash proceeds?
Give me a hint
One amount is a measurement change; the other is the buyer's consideration.
Compare my reasoning
- The revaluation changed carrying amount while the business still owned the building.
- The buyer's payment determines disposal proceeds.
- Compare proceeds with the carrying amount at disposal to determine the result.
The $50,000 revaluation is not cash. Sale proceeds are the buyer's $1,000,000 payment; compare that with the asset's carrying amount at sale to find the gain or loss.
Look for these in your work
- Remeasurement separated
- Proceeds identified
- Disposal comparison stated
Common mistakes
- Showing accumulated depreciation as an expense for the current year
- Deducting current depreciation twice
- Treating the disposal gain as sales revenue or a revaluation as cash
What can you explain now?
Where does the current-period depreciation charge appear?
Compare with the explanation
Statement of profit or loss
It is the current period's expense.
After trying it yourself, choose your next review. This is your self-assessment.
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Make it stick
State how one year's depreciation appears in each of the two main financial statements.
If you needed the solution, close it and solve the problem again from a blank page. A correct answer is stronger when you can explain the reason for each step.