26.3X Harvey DaCosta, a sole trader, purchases on1 November 2015 a new machine for $18,000.His business year end is 31 October but he cannotdecide which method of depreciation he should usein respect of the machine - the straight line methodor the reducing balance method.Required:In order to assist him in making his decision,draw up the machine account, and provision fordepreciation account, for the three years from1 November 2015, using:(a) the straight line method(b) the reducing balance method.Each account must indicate which method is beingused and must be balanced at the end of each of thethree years.Notes:li) In both cases the rate of depreciation is to be10%.lii) Calculations should be made to the nearest $.

Depreciation means reducing the value of the tangible fixed assets. It is mandatory to every…

Answered: 26.3X Harvey DaCosta, a sole trader,…

26.3X Harvey DaCosta, a sole trader, purchases on 1 November 2015 a new machine for $18,000. His business year end is 31 October but he cannot decide which method of depreciation he should use

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

26.3X Harvey DaCosta, a sole trader, purchases on
1 November 2015 a new machine for $18,000.
His business year end is 31 October but he cannot
decide which method of depreciation he should use
in respect of the machine - the straight line method
or the reducing balance method.
Required:
In order to assist him in making his decision,
draw up the machine account, and provision for
depreciation account, for the three years from
1 November 2015, using:
(a) the straight line method
(b) the reducing balance method.
Each account must indicate which method is being
used and must be balanced at the end of each of the
three years.
Notes:
li) In both cases the rate of depreciation is to be
10%.
lii) Calculations should be made to the nearest $.

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