Bold Ltd purchased machinery on 1 January 2021 at a cast of R1 200 000. A major inspection has to be carried out onthe machinery every three years. The last inspection performed on the machine was on 31 December 2020 by the selleand the inspection costs were included in the purchase price. On the acquisition date, the present value of futureexpected inspection costs to be incurred was estimated at an amount of R240 000. On the acquisition date theestimated useful life of 10 years was allocated to the machine. The inspection component is part of the machine andnot a separate assetThe carrying amount of the machinery (including the inspection component) for the year ended 31 December20211. R1 124 000O2 R1 000 000O3 R1 056 0004. R1 024 000

Here's the breakdown:Original Cost: R1,200,000 (given)Depreciation Method: Straight-line…

Answered: Bold Ltd purchased machinery on 1…

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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On January 1, 2018, Jane Company purchased an equipment with an estimated useful life of 8 years. The equipment was expected to have a residual value of P20,000 at the end of its useful life. The sum-of-the-years digits method was used in computing depreciation. For the year ended December 31, 2021, the depreciation applicable to this equipment was P42,000.What was the acquisition cost of the equipment? a. 378,000 b. 398,000 c. 302,400 d. 322,400
Lokton plc has a piece of equipment which it bought on 1 January 2014 for £1,000,000. The equipment has been depreciated annually at a rate of 10% on cost (with a zero disposal value assumed at the end of its useful life). At the year-end on 30 December 2020, the fair value of the equipment was £320,000. The value in use of this asset is estimated at £280,000. The current costs to sell the equipment amount to £50,000. What is the impairment loss? Select one: a. £0 b. £80,000 c. £198,297 d. £2,000 e. £20,000 f. £251,441 g. £120,000
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Ariel Company purchased a boring machine on January 1, 2020 for P8,100,000. The useful life of the machine is estimated at three years with a residual value of P600,000. During the useful life, the expected units of production from the machine are 10,000 units for 2020, 9,000 units for 2021 and 6,000 units for 2022. What is the depreciation expense for 2021 using the most appropriate depreciation method?
Jayanne Company acquired an equipment for P4,200,000 in 2018. The policy is straight line depreciation, full depreciation in the year of acquisition and no depreciation in the year of disposal. The useful life is five years with residual value of P200,000. On July 1, 2021, the equipment was sold for P2,500,000. What is the gain on disposal in 2021?
Nicholson Company purchased equipment on January 1, 2018, for €120,000 with an estimated residual value of €30,000 and estimated useful life of 8 years. On January 1, 2020, Nicholson decided the equipment will last 12 years from the date of purchase. The residual value is still estimated at €30,000. Using the straight-line method the new annual depreciation will be? A: 7,500 B: 6,750 C: 10,000 D: 9,000
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An asset was acquired on January 1, 2020 for P800,000 and is expected to have a 5-year useful life. The straight-line method was used. On January 1, 2022, the asset was deemed to have a sound value of P720,000. The company uses the elimination method in accounting for any revaluation surplus. The replacement cost of the asset at January 1, 2022 is
An asset is purchased at a cost of P110 000 on 1 January 2016. The asset has a useful of 10 years. The company expects to sell assets after 5 years for an estimated P30 000 before taking into consideration the expected costs of disposal of P20 000. The straight-line method of depreciation is to be used for this asset. Calculate the depreciation for the year ended 31 October 2016.
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Mwakisha, a contractor, started business on 1 January 2018. Purchases and disposals of machines over the subsequent three years were as follows: Machine Date of Cost Date of Purchase Disposal Shs. MA 1 1 January 2018 5,000,000 MB 2 1 July 2019 2,500,000 1 June 2020 MC 3 1 October 2020 7,000,000 The machines are depreciated on straight line basis using a rate of 20 per cent per annum. Required: For the years 2018, 2019 and 2020, calculate the depreciation…

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