On 2015 January 1, Nicola Newman bought machinery for her printing business at a cost of $20
Question:
On 2015 January 1, Nicola Newman bought machinery for her printing business at a cost of $20 000 and paid with money in the bank. She bought another piece of machinery on 2016 January 1 for $13 500 and paid with cash. She charges depreciation at the rate of 10% per annum using the Straight-Line method. The business' policy is to charge a full year's depreciation in the year of purchase of fixed assets but not charge any in the year of sale.
On 2017 June 30 the first machine was sold for $12 500 cash. On that same day, machinery costing $14 000 was bought on credit from Phil's Mechanics Ltd.
Required:
A. Prepare the Machinery Account for 2015, 2016 and 2017.
B. Prepare the Machinery Disposal Account for 2017.
C. Prepare the Provision for Depreciation Account for the three years.
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill