Don Quixote, owner of Stable Rides started the business on 1 July 2016.At the start of the business, he had land and buildings at the value of R250 000 and purchased three vehicles at R60 000 each.Stable Rides did not buy or sell any vehicles during the first three financial years. The accumulated depreciation on vehicles as at 1 July 2019 was R104 062.50. Depreciation on vehicles is calculated at 25% p.a . on the diminishing balance method. The following applies to the financial year ended 30 June 2020. * On 1 December 2019 Stable Rides sold one vehicle for R20 000 on credit. The vehicle was purchased on 1 July 2016.The vehicle was purchased on 1 July 2016.The vehicle is depreciated at the rate of 25% p.a. on the diminishing balance method. REQUIRED: PREPARE THE FOLLOWING LEDGER ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2020. ROUND OFF TO 2 DECIMAL PLACES. * CLOSE OFF ACCOUNTS* 1} ASSET DISPOSAL 2}ACCUMULATED DEPRECIATION: VEHICLES 3}VEHICLES
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.
Don Quixote, owner of Stable Rides started the business on 1 July 2016.At the start of the business, he had land and buildings at the value of R250 000 and purchased three vehicles at R60 000 each.Stable Rides did not buy or sell any vehicles during the first three financial years. The
Depreciation on vehicles is calculated at 25% p.a . on the diminishing balance method.
The following applies to the financial year ended 30 June 2020.
* On 1 December 2019 Stable Rides sold one vehicle for R20 000 on credit. The vehicle was purchased on 1 July 2016.The vehicle was purchased on 1 July 2016.The vehicle is
REQUIRED:
PREPARE THE FOLLOWING LEDGER ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2020.
ROUND OFF TO 2 DECIMAL PLACES. * CLOSE OFF ACCOUNTS*
1} ASSET DISPOSAL
2}ACCUMULATED DEPRECIATION: VEHICLES
3}VEHICLES
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