Transport Ltd. purchased three buses from Arvind motors costing ~ 75,000 each on hire-purchase system. Payment was to be made for each bus ~ 45,000 down and the remainder in three equal instalments together with interest at 12%. Transport Ltd. wrote off depreciation at 20% on diminishing balance. It paid the first instalment at the end of the first year but could not pay the next. Arvind Motors agreed to leave one bus with the purchaser adjusting the value of the other two buses against the amount due. The buses were valued on the basis of 30% depreciation annually on Straight Line Method.

Show the necessary entries in the books of Transport Ltd.

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Straightline method is a method of depreciating fixed assets that recognizes depreciation equally over the periods of an assets estimated useful life ... View the full answer