Mr Chibanda owns a Construction company based in Kasama. His Assets Register had the following details for his assets.

Date of Acquisition	Asset Details	Cost (K)	Dep. Rate (%)	Accumulated Dep	Dep. Charge
31-Mar-18	Saloon Car	280,000.00	20.00	168,000.00	56,000.00
31-Mar-18	Soil Tester	160,000.00	25.00	120,000.00	40,000.00
01-Apr-18	Truck 8 Ton	780,000.00	25.00	390,000.00	195,000.00
01-Apr-18	Utility Van	450,000.00	25.00	225,000.00	112,500.00
28-Apr-18	Office Building	1,200,000.00	2.00	48,000.00	24,000.00
31-Mar-19	Industrial building	3,400,000.00	5.00	340,000.00	170,000.00
31-Mar-19	Tipper Truck	890,000.00	25.00	445,000.00	222,500.00
31-Mar-19	Compactor	1,700,000.00	25.00	850,000.00	425,000.00
		8,860,000.00		2,586,000.00	1,245,000.00

NOTES

1. The Saloon Car purchased on 31 March 2018 for K280,000 was sold on 31 March 2020 for K160,000
2. The Utility Van bought on 1 April 2018 was involved in an accident and it was beyond economic recovery. Since it was comprehensively insured, the Insurer paid K324,000 after deducting 10% excess.

Required:

1. Explain the terms Balancing Allowance and Balancing Charge
2. In both instances, calculate if there was any Balancing Allowance or Balancing Charge

Answer rating: 100% (QA)

Balancing allowance is the difference where the disposal value of an asset is ... View the full answer