Professional Documents
Culture Documents
Acc
Acc
of fixed assets
lecture 19
Objectives
You
Calculate
Example:
In a business with financial years ended 31 Dec, a machine is bought for $2000 in 30
June 20X6. The second machine is bought for $4000 in 31 Sept 20X7. The machines
are to be depreciated at the rate of 20% using straight line method. The record for the
first three years are:
Workings:
20X6s depreciation
$200
20X7s depreciation
: 2000x20% =
$400
$200
$600
20X8s depreciation
Machinery
Provision of
depreciation
20X6
20X6
20X6
20X6
May 31 Cash
2000
Dec 31 Balc/d
2000
20X7
20X7
20X7
20X7
Dec 31 Bal
c/d 6000
Sept 30 cash
4000
_____
800
20X8
6000
6000
20X8
20X8
Dec 31 Bal
c/d 6000
(200)
(600)
(1200)
2000
(200)
1800
Machinery
Less Provision for depreciation
6000
(800)
5200
Machinery
Less Provision for depreciation
6000
(2000)
4000
2.
3.
4.
Example
Machinery
20X6
20X6
20X6
Dec 31 Cash
5000
Dec 31 Balc/d
5000
20X7
20X7
Sept 30 cash
6000
_____
20X8
Jan 1 Bal b/d
11000
Jan 31
Disposal of
20X7
20X7
Jan 31 Disposal
of
machinery A
5000
Disposal
Jan 31 Disposal
of
20X8
3200
20X8
11000
11000
Provision of
depreciation
20X6
machinery A
2000
Disposal
of
20X8
Jan 1 Bal b/d
3200
Dec 31 Profit &
Loss 1000
Disposal of
Disposal of
machinery
A Provision for
machinery
B Provision for
Jan 31
Jan 31
Jan 31
Jan 31
depreciation Machinery
depreciation
Machinery
2000
1200
5000
6000
Cash
2000
_____
loss on
disposal 1000
5000
Machinery
5000
Profit on
disposal 200
6200
6200
5000
(1000)
20X7 Depreciation
(2200)
200
1000
(2000)
(1800)