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A company’s policy is to charge depreciation on plant and machinery at 20% per year on cost,with proportional depreciation for items purchased or sold during a year
The company’s plant and machinery at cost account for the year ended 30 September 20X3
is shown below.
20X2 1 Oct-Balance-200000$
20X3 1 Apr-cash purchase of plant-50000$
20X3 30 Jun -Transfer disposal account-40000$
20X3 30 Sep-Balance-210000$what should be the depreciation charge for plant and machinery (excluding any profit or loss on the disposal) for the year ended 30 September 20X3?
MY SOLUTIN WAY is so;
200000*20%*9/12=30000$
200000-40000=160000*20%*3/12=8000$
50000*20%*6/12=5000$
the answer=5000+8000+30000=43000$
l check and the answer is correct
just, reason why l want you to check out this solution was that the solution of revision kit was not clear for me.
thats why.please check out my solution
thank in advance.my other question is that;
in transfer disposal account, 40000$ is computed in terms of carrying amount of Plant and Machinery after 9 month or in terms of initial plant and machinery cost(200000$)???The way you have done it is fine. Nobody will look at your workings in the exam – only the final answer – so do it whatever way you find easiest 🙂
The account you are given is the “plant and machinery at cost” account. So the 40,000 transferred out is the original cost of the machine that is sold.
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