At the beginning of the financial year on 1 April 20X5, a company had a balance on plant account of

Question:

At the beginning of the financial year on 1 April 20X5, a company had a balance on plant account of £372,000 and on provision for depreciation of plant account of £205,400. The company’s policy is to provide depreciation using the reducing balance method applied to the fixed assets held at the end of the financial year at the rate of 20% per annum.

On 1 September 20X5 the company sold for £13,700 some plant which it had acquired on 31 October 20X1 at a cost of £36,000. Additionally, installation costs totalled £4,000. During 20X3 major repairs costing £6,300 had been carried out on this plant and, in order to increase the capacity of the plant, a new motor had been fitted in December 20X3 at a cost of £4,400. A further overhaul costing £2,700 had been carried out during 20X4.

The company acquired new replacement plant on 30 November 20X5 at a cost of £96,000, inclusive of installation charges of £7,000.


Required:

Calculate:

(a) The balance of plant at cost at 31 March 20X6

(b) The provision for depreciation of plant at 31 March 20X6

(c) The profit or loss on disposal of the plant.

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Chapter # 24
Section: Review Questions
Problem: 12
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Question Posted: August 19, 2023 06:09:53