11.24 Osamu Ltd operates a factory that contains a large number of machines designed to produce knitted garments. These machines are generally depreciated at 10% p.a. on a straight-line basis. In general, machines are estimated to have a residual value on disposal of 10% of cost. At 1 July 2013, Osamu Ltd had a total of 64 machines, and the statement of financial position showed a total cost of $420 000 and accumulated depreciation of $130 000. During 2013-14, the following transactions occurred: (a) On 1 September 2013, a new machine was acquired for $15 000. This machine replaced two other machines. One of the two replaced machines was acquired on 1 July 2010 for $8200. It was traded in on the new machine, with Osamu Ltd making a cash payment of $8800 on the new machine. The second replaced machine had cost $9000 on 1 April 2011 and was sold for $7300. (b) On 1 January 2014, a machine that had cost $4000 on 1 July 2004 was retired from use and sold for scrap for $500. (c) On 1 January 2014, a machine that had been acquired on 1 January 2011 for $7000 was repaired because its motor had been damaged from overheating. The motor was replaced at a cost of $4800. It was expected that this would increase the life of the machine by an extra 2 years. (d) On 1 April 2014, Osamu Ltd fitted a new form of arm to a machine used for putting special designs onto garments. The arm cost $1200. The machine had been acquired on 1 April 2011 for $10 000. The arm can be used on a number of other machines when required and has a 15-year life. It will not be sold when any particular machine is retired, but retained for use on other machines. *** CHAPTER 11 Property, plant and equipment Required 1. Record each of the transactions. The end of the reporting period is 30 June. 2. Determine the depreciation expense for Osamu Ltd for 2013-14.
11.24 Osamu Ltd operates a factory that contains a large number of machines designed to produce knitted garments. These machines are generally depreciated at 10% p.a. on a straight-line basis. In general, machines are estimated to have a residual value on disposal of 10% of cost. At 1 July 2013, Osamu Ltd had a total of 64 machines, and the statement of financial position showed a total cost of $420 000 and accumulated depreciation of $130 000. During 2013-14, the following transactions occurred: (a) On 1 September 2013, a new machine was acquired for $15 000. This machine replaced two other machines. One of the two replaced machines was acquired on 1 July 2010 for $8200. It was traded in on the new machine, with Osamu Ltd making a cash payment of $8800 on the new machine. The second replaced machine had cost $9000 on 1 April 2011 and was sold for $7300. (b) On 1 January 2014, a machine that had cost $4000 on 1 July 2004 was retired from use and sold for scrap for $500. (c) On 1 January 2014, a machine that had been acquired on 1 January 2011 for $7000 was repaired because its motor had been damaged from overheating. The motor was replaced at a cost of $4800. It was expected that this would increase the life of the machine by an extra 2 years. (d) On 1 April 2014, Osamu Ltd fitted a new form of arm to a machine used for putting special designs onto garments. The arm cost $1200. The machine had been acquired on 1 April 2011 for $10 000. The arm can be used on a number of other machines when required and has a 15-year life. It will not be sold when any particular machine is retired, but retained for use on other machines. *** CHAPTER 11 Property, plant and equipment Required 1. Record each of the transactions. The end of the reporting period is 30 June. 2. Determine the depreciation expense for Osamu Ltd for 2013-14.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Exercise 11.24
DEPRECIATION CALCULATION
*** Osamu Ltd operates a factory that contains a large number of machines designed to produce knitted
garments. These machines are generally depreciated at 10% p.a. on a straight-line basis. In general,
machines are estimated to have a residual value on disposal of 10% of cost. At 1 July 2013, Osamu Ltd
had a total of 64 machines, and the statement of financial position showed a total cost of $420 000 and
accumulated depreciation of $ 130 000. During 2013–14, the following transactions occurred:
(a) On 1 September 2013, a new machine was acquired for $15 000. This machine replaced two other
machines. One of the two replaced machines was acquired on 1 July 2010 for $8200. It was traded
in on the new machine, with Osamu Ltd making a cash payment of $8800 on the new machine. The
second replaced machine had cost $9000 on 1 April 2011 and was sold for $7300.
(b) On 1 January 2014, a machine that had cost $4000 on 1 July 2004 was retired from use and sold for
scrap for $500.
(c) On 1 January 2014, a machine that had been acquired on 1 January 2011 for $7000 was repaired
because its motor had been damaged from overheating. The motor was replaced at a cost of $4800. It
was expected that this would increase the life of the machine by an extra 2 years.
(d) On 1 April 2014, Osamu Ltd fitted a new form of arm to a machine used for putting special designs
onto garments. The arm cost $ 1200. The machine had been acquired on 1 April 2011 for $10 000. The
arm can be used on a number of other machines when required and has a 15-year life. It will not be
sold when any particular machine is retired, but retained for use on other machines.
CHAPTER 11 Property, plant and equipment
3
Required
1. Record each of the transactions. The end of the reporting period is 30 June.
2. Determine the depreciation expense for Osamu Ltd for 2013–14.
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