A company maintains its fixed assets at cost. Depreciation provision accounts, one for each type of asset, are in use. Machinery is to be depreciated at the rate of 15% per annum, and fixtures at the rate of 5% per annum, using the reducing balance method. Depreciation is to be calculated on assets in existence at the end of each year, giving a full year’s depreciation even though the asset was bought part of the way through the year. The following transactions in assets have taken place:

The financial year end of the business is 31 December.

You are to show:

(a) The machinery account.

(b) The fixtures account.

(c) The two separate provision for depreciation accounts.

(d) The fixed assets section of the balance sheet at the end of each year, for the years ended 31 December 20X5 and 20X6.

Transcribed Image Text:

20X5 20X6 1 January 1 July 1 October 1 December Bought machinery £2,800, fixtures £290 Bought fixtures £620 Bought machinery £3,500 Bought fixtures £130