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Plant and equipment:
Cost $860,000 Accumulated depreciation $397,000
During the year ended 30 September 20X3, plant with a written down value of $37,000 was sold for $49,000. The plant had originally cost $80,000. Plant purchased during the year cost $180,000. It is Lambda Co’s policy to charge a full year’s depreciation in the year of acquisition of an asset and none in the year of sale, using a rate of 10% on the straight line basis.
What was the carrying amount that should appear in Lambda Co’s statement of financial position at 30 September 20X3 for plant and equipment?ANSWER IS 510,000
The b balance on the cost account at 30 September is 860,000 – 80,000 + 180,000 = 960,000
The balance on the accumulated depreciation account is 397,000 – 43,000 + (10% x 960,000) = 450,000.
The carrying value is 960,000 – 450,000 = 510,000.
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