11. Mavron Ple owned the following motor vehicles as at 1 April 2015: Motor Vehiele Date acquired 1 October 2012 1 April 2013 Cost Estimated residual value Estimated Life ¢15,500 ¢20,000 AAT 101 $4,500 Syrs 9yrs DJH 202 $2,000 Maxron Ple's policy is to provide at the end of each financial year, depreciation using the straight line method applied on a month-by-month basis on all motor vehicles used during the year. During the financial year ended 31 March 2016 the following occurred: On 30 June 2015 AAT 101 was traded in and replaced by KGC 303. The trade-in allowance was ¢5000. KGC 303 cost ¢15,000 and the balance due (after deducting the trade-in allowance) was paid partly by a loan of ¢6,000 from Pinot Finance. KGC 303 is expected to have a residual value ¢4,000 after an estimated economic life of Syears. The estimated remaining economic life of DJH 202 was reduced from 6 years to 4 years with no change in the estimated residual value. Required: Reconstruct the Motor Vehicles Account and the Provision for Depreciation Account for the year ended 31" March 2016. Show the necessary calculations necessary. What is Depreciation?" List and explain (3) three methods of Depreciation a) b)
11. Mavron Ple owned the following motor vehicles as at 1 April 2015: Motor Vehiele Date acquired 1 October 2012 1 April 2013 Cost Estimated residual value Estimated Life ¢15,500 ¢20,000 AAT 101 $4,500 Syrs 9yrs DJH 202 $2,000 Maxron Ple's policy is to provide at the end of each financial year, depreciation using the straight line method applied on a month-by-month basis on all motor vehicles used during the year. During the financial year ended 31 March 2016 the following occurred: On 30 June 2015 AAT 101 was traded in and replaced by KGC 303. The trade-in allowance was ¢5000. KGC 303 cost ¢15,000 and the balance due (after deducting the trade-in allowance) was paid partly by a loan of ¢6,000 from Pinot Finance. KGC 303 is expected to have a residual value ¢4,000 after an estimated economic life of Syears. The estimated remaining economic life of DJH 202 was reduced from 6 years to 4 years with no change in the estimated residual value. Required: Reconstruct the Motor Vehicles Account and the Provision for Depreciation Account for the year ended 31" March 2016. Show the necessary calculations necessary. What is Depreciation?" List and explain (3) three methods of Depreciation a) b)
Chapter1: Financial Statements And Business Decisions
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Concept explainers
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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![11. Mavron Ple owned the following motor vehicles as at 1 April 2015:
Date acquired
1 October 2012
1 April 2013
Motor Vehicle
Cost Estimated residual value Estimated Life
¢15,500
¢20,000
AAT 101
¢4,500
$2,000
Syrs
DJH 202
9yrs
Mavron Ple's policy is to provide at the end of each financial year, depreciation using the straight line method applied on a month-by-month basis on all motor vehicles used during the year.
During the financial year ended 31 March 2016 the following occurred:
On 30 June 2015 AAT 101 was traded in and replaced by KGC 303. The trade-in allowance was ¢5000. KGC 303 cost ¢15,000 and the balance due (after deducting the trade-in allowance) was paid partly by a loan of ¢6,000 from Pinot Finance. KGC 303 is expected to have a residual value o
¢4,000 after an estimated economic life of 5years.
The estimated remaining economic life of DJH 202 was reduced from 6 years to 4 years with no change in the estimated residual value.
Required:
Reconstruct the Motor Vehicles Account and the Provision for Depreciation Account for the year ended 31st March 2016.
Show the necessary calculations necessary.
a)
b)
What is Depreciation?
List and explain (3) three methods of Depreciation](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F94065a4e-ef44-4ff4-b100-53026e8ae022%2F49f0cf0b-6acd-4a9d-a3d0-a9e6112f8140%2Fd737i5c_processed.png&w=3840&q=75)
Transcribed Image Text:11. Mavron Ple owned the following motor vehicles as at 1 April 2015:
Date acquired
1 October 2012
1 April 2013
Motor Vehicle
Cost Estimated residual value Estimated Life
¢15,500
¢20,000
AAT 101
¢4,500
$2,000
Syrs
DJH 202
9yrs
Mavron Ple's policy is to provide at the end of each financial year, depreciation using the straight line method applied on a month-by-month basis on all motor vehicles used during the year.
During the financial year ended 31 March 2016 the following occurred:
On 30 June 2015 AAT 101 was traded in and replaced by KGC 303. The trade-in allowance was ¢5000. KGC 303 cost ¢15,000 and the balance due (after deducting the trade-in allowance) was paid partly by a loan of ¢6,000 from Pinot Finance. KGC 303 is expected to have a residual value o
¢4,000 after an estimated economic life of 5years.
The estimated remaining economic life of DJH 202 was reduced from 6 years to 4 years with no change in the estimated residual value.
Required:
Reconstruct the Motor Vehicles Account and the Provision for Depreciation Account for the year ended 31st March 2016.
Show the necessary calculations necessary.
a)
b)
What is Depreciation?
List and explain (3) three methods of Depreciation
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