Co D acquires a plant for £600.000 on 1 Jan 2016. This machinery is depreciated on a straight-line basis over its useful economic life which is estimated to be 15 years. On 1 Jan 2021, the company revalues the machinery to be £480,000 using revaluation model. The plant was sold on 1 Jan 2022 for £470.000. Co D's year end is 31 Dec. Required: A. Clearly show cost, accumulated depreciation and carrying value of the plant as of 1 Jan 2011 before revaluation. Show accounting entries on 1 Jan 2021 when plant is revalued. B-Show accounting entries on disposal of the plant on 1 Jan 2022.

Co D acquires a plant for £600.000 on 1 Jan 2016. This machinery is depreciated on a straight-line basis over its useful economic life which is estimated to be 15 years. On 1 Jan 2021, the company revalues the machinery to be £480,000 using revaluation model. The plant was sold on 1 Jan 2022 for £470.000. Co D's year end is 31 Dec. Required: A. Clearly show cost, accumulated depreciation and carrying value of the plant as of 1 Jan 2011 before revaluation. Show accounting entries on 1 Jan 2021 when plant is revalued. B-Show accounting entries on disposal of the plant on 1 Jan 2022.

Name: Co D acquires a plant for £600.000 on 1 Jan 2016. This machinery is de
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Description: Co D acquires a plant for £600.000 on 1 Jan 2016. This machinery is depreciated on a straight-line basis over its useful economic life which is estimated to be 15 years.On 1 Jan 2021, the company revalues the machinery to be £480,000 using revaluatio

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

Problem 11E: On May 10, 2019, Horan Company purchased equipment for 25,000. The equipment has an estimated...

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On May 10, 2019, Horan Company purchased equipment for 25,000. The equipment has an estimated service life of 5 years and zero residual value. Assume that the straight-line depreciation method is used. Required: Compute the depreciation expense for 2019 for each of the following four alternatives: 1. Horan computes depreciation expense to the nearest day. (Use 12 months of 30 days each and round the daily depreciation rate to 2 decimal places.) 2. Horan computes depreciation expense to the nearest month. Assets purchased in the first half of the month are considered owned for the whole month. 3. Horan computes depreciation expense to the nearest whole year. Assets purchased in the first half of the year are considered owned for the whole year. 4. Horan records one-half years depreciation expense on all assets purchased during the year.
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Raj Ltd purchased a machine on 1st January 2019 for ₤100,000. Transporting the machine to its factory cost ₤1,600 and ₤1,000 was spent on installing it. Maintenance of the machine cost ₤750 in 2019 and the expenditure on maintenance increased by ₤200 in each of the following four years. The machine was expected to last until 31st December 2026 with a scrap (or residual) value at that date of ₤6,600. The company uses the straight-line method of depreciation. It provides for a full year’s depreciation in the year of acquisition and none in the year of sale. The machine was sold for ₤34,000 on 30th June 2023. Required: Explain briefly what you understand by the term “depreciation” as used by accountants. In what circumstances would straight-line be the most appropriate method to use for an asset? Give the following calculations: (i) the depreciation charge for 2019;(ii) the profit or loss on sale of the machine in 2023.
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