On 1 January, 2010, Ahafoman Contractors (AC) bought an Heavy Duty Crane machine from Tractor and EquipmentCompany (TEC) on Hire Purchase. The terms of the agreement were that an initial deposit of GHS200,000 was payable , followed by three installments of GHS189,890 on 31 December in each of the years from 2010 onwards.. TEC sells the machine for cash at GHS600,000. AC depreciates cranes at the rate of 25% on cost (assuming a nil residual value) The accounting years for both TEC and AC end on 31 December. Required d) Show the relevant extracts from AC’s Income Statement and statement of financial position in respect of the hire purchase agreement for the relevant years.
On 1 January, 2010, Ahafoman Contractors (AC) bought an Heavy Duty Crane machine from Tractor and EquipmentCompany (TEC) on Hire Purchase. The terms of the agreement were that an initial deposit of GHS200,000 was payable , followed by three installments of GHS189,890 on 31 December in each of the years from 2010 onwards.. TEC sells the machine for cash at GHS600,000. AC depreciates cranes at the rate of 25% on cost (assuming a nil residual value) The accounting years for both TEC and AC end on 31 December. Required d) Show the relevant extracts from AC’s Income Statement and statement of financial position in respect of the hire purchase agreement for the relevant years.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
On 1 January, 2010, Ahafoman Contractors (AC) bought an Heavy Duty Crane machine from Tractor and EquipmentCompany (TEC) on Hire Purchase. The terms of the agreement were that an initial deposit of GHS200,000 was payable , followed by three installments of GHS189,890 on 31 December in each of the years from 2010 onwards.. TEC sells the machine for cash at GHS600,000. AC
The accounting years for both TEC and AC end on 31 December.
Required
d) Show the relevant extracts from AC’s Income Statement and
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education