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Adam’s mowing Limited purchased a group of new lawnmowers for $26,000 at 1 July 2020. As the accountant of the business, you have estimated that the mowers are to last five yearsand to have $650residual value at that point. The entity’s business plan projects cutting 6,000 lawnsover the five years, with per-year projections of 650, 1,300, 1,460, 2,140 and 550 lawns over the five years. Required: a) Calculate the accumulated depreciation balance at the end of the second year using each of the following depreciation bases. Show your working.  straight-line diminishing balance (52 per cent rate) units-of-production.

Adam’s mowing Limited purchased a group of new lawnmowers for $26,000 at 1 July 2020. As the accountant of the business, you have estimated that the mowers are to last five yearsand to have $650residual value at that point. The entity’s business plan projects cutting 6,000 lawnsover the five years, with per-year projections of 650, 1,300, 1,460, 2,140 and 550 lawns over the five years. Required: a) Calculate the accumulated depreciation balance at the end of the second year using each of the following depreciation bases. Show your working.  straight-line diminishing balance (52 per cent rate) units-of-production.

FINANCIAL ACCOUNTING
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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Adam’s mowing Limited purchased a group of new lawnmowers for $26,000 at 1 July 2020. As the accountant of the business, you have estimated that the mowers are to last five yearsand to have $650residual value at that point. The entity’s business plan projects cutting 6,000 lawnsover the five years, with per-year projections of 650, 1,300, 1,460, 2,140 and 550 lawns over the five years.

Required:

a) Calculate the accumulated depreciation balance at the end of the second year using each of the following depreciation bases. Show your working. 

  • straight-line
  • diminishing balance (52 per cent rate)
  • units-of-production.
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