Nadia’s financial year ends on 31 August. She depreciates her office fixtures by 25% per annum on cost. Depreciation is calculated from the date of purchase. No depreciation is charged in the year of disposal.

a. Name and explain two accounting principles Nadia is observing by depreciating her office fixtures.

On 1 September 20–3 the following balances appeared in Nadia’s ledger:
                                                                                                            $
Office fixtures at cost .........................................................     4,500
Provision for depreciation of office fixtures ....................     2,100
On 1 December 20–3 Nadia purchased additional office fixtures, $2,400, on credit from AB Limited.
On 1 March 20–4 Nadia sold office fixtures for $120 which was received in cash. The office fixtures had been purchased on 1 September 20–0 for $1,000.

b. Write up the office fixtures account, the provision for depreciation of office fixtures account and the disposal of office fixtures account for the year ended 31 August 20–4. Balance the accounts where necessary and bring down the balances on 1 September 20–4.

c. Prepare a relevant extract from Nadia’s statement of financial position on 31 August 20–4.