HK Ltd acquired machinery with a cash price of $100,000 under hire purchase terms. HK Ltd made a down payment of $20,000 on 1 September 2019 and settled the balance by 16 equal monthly installments of $5,500 each starting on 1 October 2019. HK Ltd closes its accounts on 31 March each year. The annual allowance rate for the machinery is 30% Which statement concerning the depreciation allowances for the machinery is correct? OA. The machinery will be transferred to the 30% pool in 2020/21. OB. The annual allowance in the year of assessment 2019/20 is $20,460. OC. The annual allowance in the year of assessment 2020/21 is $5,700. OD. No initial allowance will be given in the year of assessment of 2020/21.

HK Ltd acquired machinery with a cash price of $100,000 under hire purchase terms. HK Ltd made a down payment of $20,000 on 1 September 2019 and settled the balance by 16 equal monthly installments of $5,500 each starting on 1 October 2019. HK Ltd closes its accounts on 31 March each year. The annual allowance rate for the machinery is 30% Which statement concerning the depreciation allowances for the machinery is correct? OA. The machinery will be transferred to the 30% pool in 2020/21. OB. The annual allowance in the year of assessment 2019/20 is $20,460. OC. The annual allowance in the year of assessment 2020/21 is $5,700. OD. No initial allowance will be given in the year of assessment of 2020/21.

Name: HK Ltd acquired machinery with a cash price of $100,000 under hire pu
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Description: HK Ltd acquired machinery with a cash price of $100,000 under hire purchase terms. HK Ltd made a down payment of $20,000 on 1 September 2019 and settledthe balance by 16 equal monthly installments of $5,500 each startingon 1. October 2019. HK Ltd cl

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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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

HK Ltd acquired machinery with a cash price of $100,000 under hire purchase terms. HK Ltd made a down payment of $20,000 on 1 September 2019 and settled
the balance by 16 equal monthly installments of $5,500 each starting
on 1. October 2019. HK Ltd closes its accounts on 31 March each year. The annual allowance rate for the machinery is 30%.
Which statement concerning the depreciation allowances for the machinery is correct?
OA. The machinery will be transferred to the 30% pool in 2020/21.
OB. The annual allowance in the year of assessment 2019/20 is $20,460.
OC. The annual allowance in the year of assessment 2020/21 is $5,700.
OD. No initial allowance will be given in the year of assessment of 2020/21.

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