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September 17, 2015 at 10:27 pm
Absolutely! This method is a lot easier. Thank you sir
September 17, 2015 at 9:51 am
Kindly shed for more light on the answer for this question sir,
The plant and machinery acc at cost of a business for the yr ended 31 Dec 2008 is as follows,
Jan 1 balance. 240000
31 March transfer disposal acc 80000
30 June ,cash purchase of plant 160000
31 Dec balance,340000
Depreciation – 20% per annum on straight line basis with proportionate depreciation in the years of purchase and disposal
John Moffat says
September 17, 2015 at 10:49 am
You have copied the question wrong – the disposal is 60,000 (not 80,000)
You can get the answer is several ways. If you don’t understand the answer at the back of the lecture notes, then maybe you will find this way easier:
The cost is 240,000 from 1 Jan to 31 March, 3 months. So the depreciation is 3/12 x 20% x 240,000 = 12,000
Then it falls to 180,000 (240,000 – 60,000) and stays at this from 1 Apr to 30 Jun, 3 months, So the depreciation is 3/12 x 20% x 180,000 = 9,000.
Then it increases to 340,000 (180,000 + 160,000) and stays at this from 1 Jul to 31 Dec, 6 months. So the depreciation is 6/12 x 20% x 340,000 = 34,000
So the total depreciation is 12,000 + 9,000 + 34,000 = 55,000
July 9, 2015 at 4:09 am
so sir if we had a gain
July 9, 2015 at 8:54 am
If the ‘missing figure’ on the disposal account is on the other side then there is a profit on sale instead of a loss.
This appears in the Statement of profit or loss as a negative cost and therefore increases the profit instead of decreases it.
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