Accumulated Depreciation

FA – L1 – Q24 – Non-current assets and depreciation

Prepare vehicle, accumulated depreciation, and depreciation accounts for Ama's car leasing business for 20X6 to 20X9.

Question

Ama leases out German sports cars on a short-term basis. She started business on 1 January 20X6 and has decided to depreciate the cars on a straight line basis at 25% per annum on cost at the year-end. During the years 20X6 to 20X9 the following purchases took place:

Year	Purchase Details	Cost (GH¢000)
20X6	Acquired 20 Porsche 924 Turbos at a cost of GH¢18,600,000 each	372,000
20X7	Purchased 6 Porsches for a total cost of GH¢108,600,000	108,600
20X8	Purchased a further two cars costing GH¢19,800,000 each	39,600
20X9	Purchased 15 cars for GH¢21,000,000 each	315,000

Ama prepares accounts to 31 December each year.

Required
Prepare a vehicle account, an accumulated depreciation account, and a depreciation account for the years 20X6 to 20X9.

Answer

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Tags: Accumulated Depreciation, Asset management, Depreciation, Financial accounting, Ledger accounts, Non-current Assets, Straight-line Method, Vehicle account
Level: Level 1

Topic: Non-current assets and depreciation

FA – L1 – Q20 – Non-current assets and depreciation

Record Sophia’s machine transactions for 20X6-20X8 and show financial position extracts.

Question

Since she commenced business on 1 January 20X6, Sophia has purchased for cash the following three machines.

Machine	Date of purchase	Cost (GH₵)	Rate of depreciation
Machine 1	20 January 20X6	4,200	25%
Machine 2	17 April 20X7	5,000	30%
Machine 3	11 July 20X8	3,500	35%

Sophia’s policy is to charge a full year’s depreciation in the year of purchase irrespective of the date of purchase. The reducing balance method is used to calculate depreciation. Accounts are prepared to 31 December each year.

Required
(a) Prepare the machinery account and accumulated depreciation account showing the charge to the depreciation account for each year.
(b) Show the relevant statement of financial position extracts for each year.

Answer

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Tags: Accumulated Depreciation, Depreciation, Financial Position, Machinery Account, Non-current Assets, Reducing Balance Method
Level: Level 1

Topic: Non-current assets and depreciation

FA – L1 – Q19 – Non-current assets and depreciation

Record Martin’s machine transactions for 20X8-20X9 and show financial position extracts.

Question

Martin bought a machine for GH₵10,000 on 1 January 20X8. He estimates a useful life of 8 years and a residual value of GH₵800. Depreciation is to be calculated on a straight-line basis.

Required:
(a) Write up for 20X8 and 20X9 the
(i) Machinery account (3 marks)
(ii) Accumulated depreciation account (3 marks)
(iii) Depreciation expense account (2 marks).
(b) Show how the machine would be presented in the statement of financial positions as at 31 December 20X8 and 31 December 20X9. (2 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accumulated Depreciation, Depreciation, Financial Position, Machinery Account, Non-current Assets, Straight-line Method
Level: Level 1

Topic: Non-current assets and depreciation

Tag (SQ): Accumulated Depreciation

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FA – L1 – Q24 – Non-current assets and depreciation

Prepare vehicle, accumulated depreciation, and depreciation accounts for Ama's car leasing business for 20X6 to 20X9.

FA – L1 – Q20 – Non-current assets and depreciation

Record Sophia’s machine transactions for 20X6-20X8 and show financial position extracts.

FA – L1 – Q19 – Non-current assets and depreciation

Record Martin’s machine transactions for 20X8-20X9 and show financial position extracts.

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Tag (SQ): Accumulated Depreciation

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FA – L1 – Q24 – Non-current assets and depreciation

Prepare vehicle, accumulated depreciation, and depreciation accounts for Ama's car leasing business for 20X6 to 20X9.

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FA – L1 – Q20 – Non-current assets and depreciation

Record Sophia’s machine transactions for 20X6-20X8 and show financial position extracts.

You're reporting an error for "FA – L1 – Q20 – Non-current assets and depreciation"

FA – L1 – Q19 – Non-current assets and depreciation

Record Martin’s machine transactions for 20X8-20X9 and show financial position extracts.

You're reporting an error for "FA – L1 – Q19 – Non-current assets and depreciation"

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