Dryburgh Ltd is a small manufacturing company producing specialist parts for the sports car sector. On...

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Dryburgh Ltd is a small manufacturing company producing specialist parts for the sports car sector. On 1st January 2016 it purchased 2 items of machinery to produce a given component P. Each machine cost £60,000 and had an estimated useful life of 4 years with no residual value. Dryburgh depreciates the machines straight line based on each full month of usage. Technology in this sector changes rapidly and on 1st July 2018 Dryburgh sells one machine (machine 1) on credit for £8,000. Later in the year Dryburgh decides to sell the second machine (with the intention of reinvesting in new technology) and does so on 1st November for £1,000 cash. Required: (a) (b) (c) Complete the following ledger accounts for year ended 31st December 2018: (1) Machinery account [2] [6] (ii) Depreciation of machinery account (iii) Disposal of machinery account [7] Identify the total charge to profit and loss for 2018, relating to the above [2] entries. In general terms what advice might be given to Dryburgh in relation to [3] future depreciation policy on the new technology it will invest in. Dryburgh Ltd is a small manufacturing company producing specialist parts for the sports car sector. On 1st January 2016 it purchased 2 items of machinery to produce a given component P. Each machine cost £60,000 and had an estimated useful life of 4 years with no residual value. Dryburgh depreciates the machines straight line based on each full month of usage. Technology in this sector changes rapidly and on 1st July 2018 Dryburgh sells one machine (machine 1) on credit for £8,000. Later in the year Dryburgh decides to sell the second machine (with the intention of reinvesting in new technology) and does so on 1st November for £1,000 cash. Required: (a) (b) (c) Complete the following ledger accounts for year ended 31st December 2018: (1) Machinery account [2] [6] (ii) Depreciation of machinery account (iii) Disposal of machinery account [7] Identify the total charge to profit and loss for 2018, relating to the above [2] entries. In general terms what advice might be given to Dryburgh in relation to [3] future depreciation policy on the new technology it will invest in.

Answer rating: 100% (QA)

a i Machinery Account Date Particulars Debit Credit 01012016 Purchase 120000 31122016 Depreciation 2... View the full answer