ACCOUNTING FOR FIXED ASSETS Baringo Transport Ltd. was incorporated on 1 June 2006 and on the same date bought its first bus KBC 099 S for Sh.9, 000,000. On 1 April 2007, the company bought its second bus KBS 120 T for Sh 12,000,000. On 1 June 2008, the company bought a third bus KBT 340 X for Sh.6,000,000.On 1 October 2008, Bus KBC 099 S was involved in an accident and was written off. The insurance compensation paid to Baringo Transport Ltd. was Sh.2,600,000. On 31 December 2009, Bus KBT 340 X broke down and was traded in with a new bus KB0 419 Y valued at Sh.8,000,000. Baringo Transport Ltd. paid cash amounting to Sh.5,400,000 for the bus. On 1 April 2010, a van KBP 890 B was purchased for Sh.4,800,000. Depreciation on motor vehicles is to be provided at the rate of 10% per annum on straight line basis. The policy of the company is to provide depreciation on a pro rata basis. Assume the year end for Baringo Transport Ltd. is 31 December and all busses were comprehensively insured. Required: i) Provide Motor vehicle account for the five years ended 31 Dec 2006, 2007, 2008, 2009 and 2010 Provision for depreciation account for the same years stated in (i) above Provide a Disposal of motor vehicle account ii) iii)

ACCOUNTING FOR FIXED ASSETS Baringo Transport Ltd. was incorporated on 1 June 2006 and on the same date bought its first bus KBC 099 S for Sh.9, 000,000. On 1 April 2007, the company bought its second bus KBS 120 T for Sh 12,000,000. On 1 June 2008, the company bought a third bus KBT 340 X for Sh.6,000,000.On 1 October 2008, Bus KBC 099 S was involved in an accident and was written off. The insurance compensation paid to Baringo Transport Ltd. was Sh.2,600,000. On 31 December 2009, Bus KBT 340 X broke down and was traded in with a new bus KB0 419 Y valued at Sh.8,000,000. Baringo Transport Ltd. paid cash amounting to Sh.5,400,000 for the bus. On 1 April 2010, a van KBP 890 B was purchased for Sh.4,800,000. Depreciation on motor vehicles is to be provided at the rate of 10% per annum on straight line basis. The policy of the company is to provide depreciation on a pro rata basis. Assume the year end for Baringo Transport Ltd. is 31 December and all busses were comprehensively insured. Required: i) Provide Motor vehicle account for the five years ended 31 Dec 2006, 2007, 2008, 2009 and 2010 Provision for depreciation account for the same years stated in (i) above Provide a Disposal of motor vehicle account ii) iii)

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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