Question

Rima Limited acquired a piece of equipment from HLG Ltd on 1 July 2015 at a cost of (GST exclusive) $ 500,000. Rima paid a 40% deposit and the balance was covered by a loan from HLG Ltd. Rima Limited uses the diminishing value method of depreciation at a rate of 15 % DV. Rima Ltd has a 31st December Balance Date. A. Prepare the journal entry to record the purchase of the equipment - ignore any GST. Dates required, narrations not required, show any calculations. B. Prepare the journal entry to record depreciation for the equipment for the year ended 31 December 2015. Dates required, narrations not required, show your calculations C. Prepare the journal entry to record depreciation (round to the nearest dollar) for the equipment for the year ended 31 December 2018. Dates required, narrations not required, show your calculations 8 - D. What is the carrying amount of the Equipment at 31 December 2018? Show your calculations. E. On 30 June 2019 the equipment was disposed for $170,000 cash, when replacement machinery was purchased. Prepare the journal entry to record this transaction. Dates required, narrations not required

Answer 1

Transae- eredet Date tion No. A. 1 July 2015 Jowenal Entries Accounts Name Debit Equipment $500,000 cash Loan from HLG Ltd. Depreciation expenses - Eorupment $37,500 Accomulated depreciation $200,000 $300.000 B 31 Dec 2015 $37,500 c. 31 Dee 2018 $50,123 30 June 2019 Depreciation expenses - $ 50,123 Ecruipment Accumulated depreciation Cash $170,000 Loss on sale of Eruipment $92,731 Equipment $262,731 D. The carrying amount of the Equipment at 31 December, 2018 - $ 284,033

calculations For A $ 500 000 Cost Paid of Equipment in cash ($ 500,000 X 40% Loss: $ 200.000 Loon $300,000 taken from HLG LIA. 12 months For B: Cost of equipment – $ 500,000 1 in Depreciation for the equipment for the year endod 31 December 2015 = $500 000 x 15% x 6 months > $37.500 For cand D : Cost of equipment on 1 July 2015 $500,000 Less: Deprestation for the year endod on $37500 31 December, 2015 value of equipment on 1 Jan, 2016 $462,500 hess! Depreciation for the year ended 69375 on 31 December, 2016 value of Fruipment on & Jan, 2015 $393 125 'Less Depreciation for the year ended $58,969. on 31 Decomber, 2017 value of Equipment on a Jan, 2018 $334 156 Less: Depreciation for the year ended $50 123 on 31 December 2018 value of Ernipment on 31 December 284,033 2018

$284,033 - For E value of Equipment on 31 December, 2018 Less: Depreciation upto 30 June, 2018 ( $ 284,033x15% x 662) $21,302 $262,731 $ 170,000 value of Disposed Loss Eorupment on 30 June, 2015 price on sales of Ecruipment $92,731