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a company’s plant and machinery ledger account for the year ended 30 September 20X2 was as follows
20X1
1 October balance $381 200
1 Dec cash addition $ 18 000
20X2
1 June disposal acc – cost of asset sold $ 36 000
30 Sept balance $363 200
The company policy is to charge depreciation at 20% per year on a straight line basis, with proportionate depreciation in years of purchase and disposal.
What is the depreciation charge for the year ended 30 September 20X2From 1 October to 1 December (2 months) the depreciation is based on a cost of 381,200
Then you buy more, so from 1 December to 1 June (6 months) the depreciation is based on a cost of 381200 + 18,000 = 399,200.
Then you sell some, so from 1 June to 30 September (4 months) the depreciation is based on a cost of 399,200 – 36,000 = 363,200.(You can get the figure in several different ways – I find this the easiest way 🙂 )
Hello.
Is the answer 76,240?
I calculated in this way:
1 Oct. – 1 Jun. (36,000 x 7/12) 20% = 4,200
1 Dec. – 30 Sept. (18,000 x 10/12) 20% = 3,000
Full yr. (381,200 – 36,000) 20% = 69,040Accum. Depn. = 4,200 + 3,000 + 69,040 = 76,240
Almost right.
1 Oct to 1 June is 8 months, so it should be 36,000 x 8/12 x 20% = 4,800
So your final answer should be 600 higher.
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