The following is an extract from Barrow's balance sheet at 31 August 2011:

Barrow's depreciation policy is as follows:
1. A full year's depreciation is charged in the year of acquisition, but none in the year of disposal.
2. No depreciation is charged on land.
3. Buildings are depreciated at an annual rate of 2 per cent on cost.
4. Plant is depreciated at an annual rate of 5 per cent on cost after allowing for an estimated residual value of £5000.
5. Vehicles are depreciated on a reduced balance basis at an annual rate of 40 per cent on the reduced balance, i.e. on the net book value as at the end of the previous year.
6. Furniture is depreciated on a straight-line basis at an annual rate of 10 per cent on cost after allowing for an estimated residual value of £2000.
Additional information:
1. During the year to 31 August 2012 new furniture was purchased for the office. It cost £3000 and it is to be depreciated on the same basis as the old furniture. Its estimated residual value is £300.
2. There were no additions to, or disposals of, any other fixed assets during the year to 31 August 2012.

Required:
(a) Calculate the depreciation charge for each of the fixed asset groupings for the year to 31 August 2012.
(b) Show how the fixed assets would appear in Barrow's balance sheet as at 31 August2012.

Transcribed Image Text:

Fixed assets Accumulated depreciation Net book value lHe Cost Land Buildings Plant Vehicles Furniture 200000 150 000 55 000 45 000 20000 60000 37 500 28 800 12 600 138 900 200000 90000 17 500 16 200 7 400 331 100 470 000