Question

Full Speed Limited                                                  
                                                  
Assume that you have been appointed as a Fixed Asset Manager in Full Speed Limited. Your role is to maintain all the Fixed Assets Ledger balances and account for the depreciation on them. The mangement of the company asked you an updated ledger balances for its Vehicle Account, Accumulated depreciation on vehicles and gain / (loss) on sale vehicles. Upon scrunity of the financial statements of Full Speed Limited for the year ended 30 June 2017 you found the following details:                                                  
                                                  
                                                  
                                                  
                                                  
               Description   GBP £                              
               Vehicles - at Cost   652,013                               
               Less: Accumulated depreciation    (244,505)                              
               WDV of vehicles   407,508                               
                                                  
Full Speed Limited provides depreciation on vehicles @ 15% per annum on written down values. Depreciation on addition / deletion is provided in proprtion to the period of use.                                                  
                                                  
                                                  
Other related information is as follows:                                                  
                                                  
i   On 1 August 2017, a vehicle which was aquired at a cost of £ 8,500 on 1 July 2015 was exchanged for a new vehicle. The balance was settled with a cheque fpr £ 3,500. The list price of the new vehicle was £ 9,000                                              
                                                  
                                                  
ii   Three new vehicles were purchased on 1 December 2017 for £ 12,500 each.                                               
                                                  
iii   On February 2018, a vehicle having written down value of £ 5,500 was repaired at a cost of £ 250,000. It is expected that the repairs would improve the efficiency of the vehicle significantly.                                              
                                                  
                                                  
iv   On 30 June 2018, a vehicle purchased on 1 January 2016 at a cost of £ 15,000 was sold for £ 13,500.                                              
                                                  

Answer 1

New vehicle Dr 9000 Accumulated depreciation. 867 To Gain on vehicle. 3657 To vehide 6900 Depreciation or 1238 Accumulated depreciation. 1238 22 Vehicle 37500 Cash 37500 9375 Depreciation 4375 Accumulated Dep" [12500X 15%x7/12) Vehicle 250000 Bank 250000 (capitalured cost)

28 29 30 31 26 27 Depreciation Dr 15625 Accumulated 15625 depreciation (250000x 15%x5/12) W - Cash. 13500 Accumulated Deph To Gain to Vehicle 4976 3476 15000 Updated balance. Vehicle - Sold (4) Puzchased (4) Cost capitalised sal Sold. Balance 652013 (8500) 37500 250000 (15000) 916013

Accumulated deprclation a) sold (H) On exchange vehicle LH on purchased vehicle (t On capitalised cost - on sold auet 244505 (2436) 1236 4375 (4976) 258331 Gain on vehicle = 2936+ 3476 = 6412