Accounting Test Question DEP No 1: |
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Question: Johnson & Co, a building and construction firm, commenced trading on 1 January Year 6. During the three years to 31 December Year 8, the company bought and sold motor vehicles for use in the business as follows:
The firm provides for depreciation of its motor vehicles at the rate of 20% per annum of the straight line basis, with no residual value. A full year’s depreciation is provided for motor vehicles bought before 1 July but no depreciation is provided in the year of disposal. Required: (1) Prepared in the books of Johnson & Co for the period 1 January Year 6 to 31 December Year 8, balancing the accounts each year, the following: (a) Using the straight line basis for depreciation: (i) Motor Vehicles Account (ii) Provision for Depreciation Account (iii)Motor Vehicles Disposal Account (15 marks) (b) Using the reducing balance basis for depreciation at the rate of 25% per annum: (i) Provision for Depreciation Account (ii) Motor Vehicles Disposal Account (10 marks) |
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