Contractors Ltd was formed on 1 January 2016 and the following purchases and sales of machinery were made during the first 3 years of operations.

 

Each machine was estimated to last 10 years and to have a residual value of 5 per cent of its cost price. Depreciation was by equal instalments, and it is company policy to charge depreciation for every month an asset is owned.
 

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Date 1 January 2016 1 October 2016 30 June 2018 1 July 2018 Asset Machines 1 and 2 Machines 3 and 4 Machine 3 Machine 5 Transaction purchase purchase sale purchase Price £40,000 each £15,200 each £12,640 £20,000 Date 1 January 2016 1 October 2016 30 June 2018 1 July 2018 Asset Machines 1 and 2 Machines 3 and 4 Machine 3 Machine 5 Transaction purchase purchase sale purchase Price £40,000 each £15,200 each £12,640 £20,000

Answer rating: 100% (QA)

Answer 1 Machinery 1 2 The cost of the Machines 1 and 2 was 40000 each and they were estimated to last 10 years and have a residual value of 5 of its cost price Since the machines were purchased on 1 ... View the full answer