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Question 3 28 marks On 1 July 2017, Guinness Ltd acquired two assets within the same class of plant and equipment for cash. I

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Depreciation Computation
Equal benefits all over the year hence straight line method of depreciation
Particulars Machine A Machine B
a Useful life 5 3
b Cost 100,000 60000
c Depreciation per year b/a 20000 20000
d Carrying value after depreciation (b-c) 80,000 40000
e Revalued amount 84000 38000
f Revaluation profit/loss 4,000 -2000
S.l No. Date Particulars Debit Credit
1 1-Jul-17 Machine A A/C 100,000
Machine B A/C 60000
To   Bank A/C 160000
(Being Assets purchased)
2 30-Jun-18 Depreciation A/c 40000
To Provision for Depreciation A/c 40000
(Being Depreciation provided)
3 30-Jun-18 Profit and Loss A/c 40000
To Depreciation A/c 40000
(Being Depreciation carried to Profit and Loss A/c)
4 30-Jun-18 Machine A A/c 4000
TO    Revaluation reserve 4000
(Being Revaluation done for Machine )
5 30-Jun-18 Profit and Loss A/c 2000
To Machine B A/c 2000
(Being Revaluation done for Machine B and revaluation loss recognized in Profit and Loss A/c)
6 1-Jan-19 Bank A/c 29000
Provision for depreciation A/c 20000
Profit and Loss A/c (loss on sale of asset) 9000
TO Machine B A/c 58000
(Being machine sold and loss on sale accounted)
7 30-Jun-19 Depreciation A/c (84000/4) 21000
To Provision for depreciation A/c 21000
(Being Depreciation provided )
Notes Asset carrying value (84000-21000 63000
Revalued amount 58000
Revaluation loss -5000
8 30-Jun-19 Revaluation reserve A/c 4000
Profit and Loss A/c (Exces of revaluation loss over reserve) 1000
To Machine A A/c 5000
(Being revaluation loss accounted)
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