A company depreciates its motor vehicles based on reducing balance method on strict time basis at the rate of 25 per cent per annum on 31 December each year. Depreciation on its plant at the rate of 10 per cent per annum, straight line method with a full
A company depreciates its motor vehicles based on reducing balance method on strict time basis at the rate of 25 per cent per annum on 31 December each year.
Depreciation on its plant at the rate of 10 per cent per annum, straight line method with a full year’s depreciation charged in the year of acquisition and none in the year of disposal.
The following are the balances of the non-current assets as at 31 December 2015: Motor Vehicles $
Original cost 50,000
Accumulated depreciation (15,000)
Net book value 35,000
Plant
Original cost $ 120,000
Accumulated depreciation (50,000)
Net book value 70,000
The following transactions took place during the year 31 December 2016. The following transactions took place during the year ended 31 December 2016: (i) Purchased motor vehicles on 1 July 2016 totaling $40,000, paying by cheque. (ii) Purchased plant totaling $27,000 on 1 October 2016, paying by cheque.
(iii) Sold motor vehicle on 1 April 2016 and received a cheque for $8,000. This motor vehicle was purchased on 1 June 2014 for $15,000.
You are required to show: • Motor vehicle account. • Plant account • Accumulated depreciation account – Motor vehicle • Disposal account – Motor vehicle
Note: (All computation should be rounded to the nearest $. Show all your necessary workings)
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