The following assets were owned by Papanui Earthmoving Limited as at 1 April 2016.
Asset 1 x bulldozer
1 x bitumen machine
1 x digger
12 x electric drills (pooled)
Depreciation Rate 15% DV
18% DV 12% DV 50% DV
Cost $128,500 $173,600 $83,550 $4,800
Adjusted Tax Value $78,900
$64,350 $56,560 $1,600
All of the above assets are used exclusively by the company in the carrying on of their earthmoving business. The company has a 31 March balance date.
During the 2017 income year, the following transactions occurred:
• The bulldozer in the above table was sold in July 2016 for $130,000.
• A new bulldozer was bought on 5 October 2016 for $150,000.
• The digger was sold in March 2017 for $49,560.
• Five (5) new electric drills were purchased in January 2017. Each drill cost $600. Eight
(8) drills, which were sold in July 2016 for a total of $2,800, were part of the existing
electric drill tax depreciation pool listed in the above table.
• Two-hundred and fifty (250) new diamond drill bits were purchased in February 2017
for $7,500. For diamond drill bits, the diminishing value (DV) depreciation rate is 50% and the straight line (SL) depreciation rate is 65%. These assets are to be accounted for as part of a new pool of assets for depreciation purposes.
Required:
Calculate the annual depreciation charge for Papanui Earthmovers Limited for the income year ended 31 March 2017 including the adjustments upon the sale of any depreciable asset.