QUESTION 2

Course Outline (10 MARKS) QUESTION 2 - SPECIAL DEDUCTION - DEPRECIATION A transport company's chief source of income is the transportation of fuel throughout the country. During the year of income, the following transactions occurred: - On 31 March it purchased a ship for K1.2m for the purpose of transporting refined oil to Papua New Guinea. (Depreciation rate 11.25% p.a.) - On 30 June it sold a motor vehicle for K10,000. The cost price was K9,000 and the written down value was K3,000 at the date of sale. - On 31 August it purchased a motor vehicle for business purposes for K30,000. - On1st October sold another machinery for K 24,000. The cost price was K 52,000. Written Down value was K 32,000. - Solar Power Energy Equipment purchased for K 15,000 on 31st March. Calculate the depreciation under the diminishing value method and other loss or gains on disposal for the year of income in question. 10 MARKS