Question

Question21.16A

21.16A A company maintains its non-current assets at cost. An accumulated provision for deprecia- tion account is used for each type of asset. Machinery is to be depreciated at the rate of 15 per cent per annum, and fixtures at the rate of 5 per cent per annum, using the reducing balance method. Depreciation is to be calculated on assets in existence at the end of each year, giving a full year's depreciation even though the asset was bought part of the way through the year. The following transactions in assets have taken place: 2019 1 January Bought machinery £2,800, fixtures £290 1 July Bought fixtures £620 2020 1 October Bought machinery £3,500 1 December Bought fixtures £130 The financial year end of the business is 31 December. You are to show: (a) The machinery account. (b) The fixtures account. (c) The two separate accumulated provision for depreciation accounts. (d) The non-current assets section of the balance sheet at the end of each year, for the years ended 31 December 2019 and 2020.

Answer 1

Amount Date Particulars Date Date Particulars 01/01/2019 Machinery purchased Machinery Account Amount Date Particulars £2,800.00 12/31/2019 Closing Balance £2,800.00 Machinery Accumulated Depreciation Account Amount Particulars 12/31/2019 Depreciation Expense (@15% on £2,800) £ 420.00 £ 420.00 Amount £ 420.00 12/31/2019 Closing Balance £2,800.00 £2,800.00 £ 420.00 £ 420.00 01/01/2020 Opening Balance 10/01/2020 Machinery purchased £2,800.00 £3,500.00 01/01/2020 Opening Balance 12/31/2020 Depreciation Expense 15% @ £2,800 less £420 15% @ £3,500 £ 357.00 £ 525.00 £ 882.00 12/31/2020 Closing Balance 12/31/2020 Closing Balance £6,300.00 £6,300.00 £1,302.00 £1,302.00 £6,300.00 £1,302.00 Amount Date Particulars Amount Date Particulars 01/01/2019 Fixtures purchased 07/01/2020 Fixtures purchased Fixtures Account Amount Date Particulars £ 290.00 £ 620.00 12/31/2019 Closing Balance £ 910.00 Fixtures Accumulated Depreciation Account Date Particulars 12/31/2019 Depreciation Expense (@5% on £910) Amount £ 45.50 12/31/2019 Closing Balance £ 910.00 £ 910.00 £ £ 45.50 45.50 £ 45.50 £ 45.50 01/01/2020 Opening Balance 12/01/2020 Fixtures purchased £ 910.00 £ 130.00 01/01/2020 Opening Balance 12/31/2020 Depreciation Expense 5% @ £910 less £45.50 5% @ £130 £ £ 43.23 65.00 £ 108.23 12/31/2020 Closing Balance 12/31/2020 Closing Balance £1,040.00 £1,040.00 £ £ 153.73 153.73 £1,040.00 £ € 153.73 153.73

Balance Sheet As on Dec 31, 2019 Balance Sheet As on Dec 31, 2020 Non Current Assets Machinery - At Cost £2,800.00 Less: Accumulated Depreciation £ 420.00 Non Current Assets Machinery - At Cost £6,300.00 Less: Accumulated D £1,302.00 £2,380.00 £ 4,998.00 Fixtures - At Cost Less: Accumulated Depreciation £ 910.00 £ 45.50 Fixtures - At Cost £1,040.00 Less: Accumulated D £ 153.73 £ 864.50 £ 886.28