Required:Prepare the journal entry at 31 December 2021 to record the depreciation for 2021. Show your workings. Part IICollins Company purchased a delivery lorry on 1 January 2014 for $840,000. The lorry has anestimated useful life of 12 years and no residual value. On 1 January 2021, the company incurredthe following expenditure for the lorry:(i) purchased a new engine at a cost of $45,000,(ii) installed it to the lorry at a cost of $5,000, and(iii) painted the lorry at a cost $1,950 after 7 years of use.On the same date, the company's management now expects the total estimated useful life of the lorryis revised to 17 years with no residual value. The company uses the straight-line method ofdepreciation (calculated to the nearest whole month) and adjusts its accounts annually on 31December.

Fixed assets are those assets which are held by the business for longer period of time. Depreciation…

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Business

Accounting

Required: Prepare the journal entry at 31 December 2021 to record the depreciation for 2021. Show your workings.

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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Question

Required: Prepare the journal entry at 31 December 2021 to record the depreciation for 2021. Show your workings.

Part II
Collins Company purchased a delivery lorry on 1 January 2014 for $840,000. The lorry has an
estimated useful life of 12 years and no residual value. On 1 January 2021, the company incurred
the following expenditure for the lorry:
(i) purchased a new engine at a cost of $45,000,
(ii) installed it to the lorry at a cost of $5,000, and
(iii) painted the lorry at a cost $1,950 after 7 years of use.
On the same date, the company's management now expects the total estimated useful life of the lorry
is revised to 17 years with no residual value. The company uses the straight-line method of
depreciation (calculated to the nearest whole month) and adjusts its accounts annually on 31
December.

Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.

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