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X Limited provided the following information relating to its non-current assets at 1 January 2021. Plant and Machinery $ 400 000 Motor Vehicle $ 60000 Building $ Cost 600 000 Accumulated depreciation 150 000 24000 Net book value 450 000 36000 The following transactions took place during the year ended 31 December 2021. 160000 240000

X Limited provided the following information relating to its non-current assets at 1 January 2021. Plant and Machinery $ 400 000 Motor Vehicle $ 60000 Building $ Cost 600 000 Accumulated depreciation 150 000 24000 Net book value 450 000 36000 The following transactions took place during the year ended 31 December 2021. 160000 240000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Explain to what extent the value of the diesel lorry is to be imparied. Support your answer with calculations.

X Limited provided the following information relating to its non-current assets at 1 January 2021. Plant and Machinery $ Cost 400 000 60 000 Accumulated depreciation 160000 24 000 Net book value 240 000 36 000 The following transactions took place during the year ended 31 December 2021. 1 The building, which has a useful life of 20 years, was purchased on 1 January 2016. It was revalued to $750 000 on 1 January 2021. Installation Delivery Building $ 600 000 150 000 450 000 2 A new machine was purchased on 1 March 2021 costing $200 000. Other related costs were also incurred as follows: Pre-production testing Repair and maintenance for a 5-year contract Motor Vehicle $ Building Plant and machinery Motor vehicles A full year's depreciation $ 11000 8000 5000 30 000 54 000 3 The motor vehicle is a diesel lorry which was bought on 1 January 2019. It has an estimated useful life of 5 years with no residual value. A recent government environmental policy urged X Limited to review the value of this lorry. Further information at 31 December 2021 relating to the lorry was as follows: Estimated value in use Expected selling price, before incurring selling costs of $4000 $ 18500 21000 4 The depreciation policy of X Limited is as follows: straight-line method reducing balance method at an annual rate of 25% straight-line method is charged in the year of purchase.
Transcribed Image Text:X Limited provided the following information relating to its non-current assets at 1 January 2021. Plant and Machinery $ Cost 400 000 60 000 Accumulated depreciation 160000 24 000 Net book value 240 000 36 000 The following transactions took place during the year ended 31 December 2021. 1 The building, which has a useful life of 20 years, was purchased on 1 January 2016. It was revalued to $750 000 on 1 January 2021. Installation Delivery Building $ 600 000 150 000 450 000 2 A new machine was purchased on 1 March 2021 costing $200 000. Other related costs were also incurred as follows: Pre-production testing Repair and maintenance for a 5-year contract Motor Vehicle $ Building Plant and machinery Motor vehicles A full year's depreciation $ 11000 8000 5000 30 000 54 000 3 The motor vehicle is a diesel lorry which was bought on 1 January 2019. It has an estimated useful life of 5 years with no residual value. A recent government environmental policy urged X Limited to review the value of this lorry. Further information at 31 December 2021 relating to the lorry was as follows: Estimated value in use Expected selling price, before incurring selling costs of $4000 $ 18500 21000 4 The depreciation policy of X Limited is as follows: straight-line method reducing balance method at an annual rate of 25% straight-line method is charged in the year of purchase.
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