Question

QUESTION 9

Matt purchased equipment at the beginning of July 2016 for $22,100. Matt decided to depreciate the equipment over a eight year period using the straightline method. Matt estimated the equipment's residual value at $1,800. The estimated fair market value at the end of June 2016 was $20 000. Which of the following statements is correct concerning Matt's financial statements at 30 June 2018?

1. The carrying amount is $18,650

2. The carrying amount is $17,000

3. The equipment will be reported on the statement of financial position at its fair market value of $20,000

4. The carrying amount is $17,025

QUESTION 10

Assets classified as property, plant and equipment are reported at:

1. Each asset's original cost less depreciation since acquisition

2. The estimated residual value at the statement of financial position date

3. Each asset's estimated market value at the statement of financial position date less depreciation

4. Each asset's estimated market value at the statement of financial position date

Answer 1

Answer to Q#9 (First question in the list): Option-(d): The carrying amount is $17,025 Workings: Under straight-line method, Annual depreciation expense = Depreciable cost / Useful life of the asset $22,100 -$1,800 $20,300 Capitalized cost of the equipment Less: Estimated residual value Depreciable cost Estimateed useful life, years Annual depreciation expense # of years the asset is used Depreciation for 2 years charged $2,537.5 ($20300 / 8 years] 2 (Time gap between Jul. 1, 2016 and Jun 30, 2018] $5,075 [$2537.5 x 2 years] So, carrying amount on Jun. 30, 2018 $17,025 (Cost - Depreciation charged for 2 years = $22100 - $5075 = $17025]