ABC Ltd's financial year ends on 31 Dec. The company uses the straight-line depreciation method. The following transactions occurred in 2019. Ignore GST. 1. On 3 Jan, ABC Ltd replaced a machine's major operating parts at a cost of $9 600, after which the machine has a useful life of 4 more years and a revised residual value of $4 000. The carrying amount of the parts replaced was $400. This machine was purchased on 2 Jan 2015 at a cost of $36 000 with a useful life of 5 years and a residual value of $6 000. 2. On 30 March, ABC Ltd scrapped a machine that cost $32 000 and had accumulated depreciation of $28 000. Disposal costs of $500 were incurred. 3. On 1 July, ABC Ltd exchanged a machine that had a cost of $92 000 and accumulated depreciation to the date of exchange of $62 000 for a new similar machine. A trade-in allowance of $25 000 was received for the old machine and $60 000 was paid in cash. 4. On 1 Sep, ABC Ltd sold a machine for $45 000 cash. The machine was purchased at a cost of $105 000 on 31 August 2014. The machine had a useful life of 6 years and a residual value of $9 000 when purchased. Required: Prepare entries in general journal form to record these transactions (narrations not required).

ABC Ltd's financial year ends on 31 Dec. The company uses the straight-line depreciation method. The following transactions occurred in 2019. Ignore GST. 1. On 3 Jan, ABC Ltd replaced a machine's major operating parts at a cost of $9 600, after which the machine has a useful life of 4 more years and a revised residual value of $4 000. The carrying amount of the parts replaced was $400. This machine was purchased on 2 Jan 2015 at a cost of $36 000 with a useful life of 5 years and a residual value of $6 000. 2. On 30 March, ABC Ltd scrapped a machine that cost $32 000 and had accumulated depreciation of $28 000. Disposal costs of $500 were incurred. 3. On 1 July, ABC Ltd exchanged a machine that had a cost of $92 000 and accumulated depreciation to the date of exchange of $62 000 for a new similar machine. A trade-in allowance of $25 000 was received for the old machine and $60 000 was paid in cash. 4. On 1 Sep, ABC Ltd sold a machine for $45 000 cash. The machine was purchased at a cost of $105 000 on 31 August 2014. The machine had a useful life of 6 years and a residual value of $9 000 when purchased. Required: Prepare entries in general journal form to record these transactions (narrations not required).

Name: ABC Ltd's financial year ends on 31 Dec. The company uses the straigh
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Description: ABC Ltd's financial year ends on 31 Dec. The company uses the straight-line depreciation method. Thefollowing transactions occurred in 2019. Ignore GST.1. On 3 Jan, ABC Ltd replaced a machine's major operating parts at a cost of $9 600, after which

FINANCIAL ACCOUNTING

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Chapter1: Financial Statements And Business Decisions

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A: a)

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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Question

ABC Ltd's financial year ends on 31 Dec. The company uses the straight-line depreciation method. The
following transactions occurred in 2019. Ignore GST.
1. On 3 Jan, ABC Ltd replaced a machine's major operating parts at a cost of $9 600, after which the machine
has a useful life of 4 more years and a revised residual value of $4 000. The carrying amount of the parts
replaced was $400. This machine was purchased on 2 Jan 2015 at a cost of $36 000 with a useful life of 5
years and a residual value of $6 000.
2. On 30 March, ABC Ltd scrapped a machine that cost $32 000 and had accumulated depreciation of $28
000. Disposal costs of $500 were incurred.
3. On 1 July, ABC Ltd exchanged a machine that had a cost of $92 000 and accumulated depreciation to the
date of exchange of $62 000 for a new similar machine. A trade-in allowance of $25 000 was received for
the old machine and $60 000 was paid in cash.
4. On 1 Sep, ABC Ltd sold a machine for $45 000 cash. The machine was purchased at a cost of $105 000 on
31 August 2014. The machine had a useful life of 6 years and a residual value of $9 000 when purchased.
Required: Prepare entries in general journal form to record these transactions (narrations not required).

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