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Amirtha commenced business on 1 January 2010. During the first two years of business
the following non-current assets were purchased on the dates shown:
Motor vehicles
2010 $
1 January MV1 26 000
1 July MV2 18 000
2011
1 April MV3 24 000
Equipment
2010
1 January EQ1 30 000
2011
1 January EQ2 44 000
Amirtha has a policy to depreciate motor vehicles at 20% per annum on cost (straight
line method) and equipment at 15% per annum on cost (straight line method), rates
being charged for each month of ownership.
REQUIRED
(a) Calculate the total depreciation for each of the years 2010 and 2011.
(i) Motor vehicles
(ii) Equipment
Early in 2012, consideration was given to changing to the reducing (diminishing)
balance method, with the following rates applying to the balance at the end of each
year.
Motor vehicles 25%
Equipment 20%
A full year’s depreciation would be charged irrespective of the date of purchase.
REQUIRED
(b) Calculate the total depreciation for each of the years 2010 and 2011, using the
reducing (diminishing) balance method for:
(i) Motor vehicles
(ii) Equipment
The original profits for the first two years in business were:
2010 $86 000
2011 $94 000
REQUIRED
(c) Prepare a statement to show the revised profits for the years 2010 and 2011, if
the reducing (diminishing) balance method had been used.
the following non-current assets were purchased on the dates shown:
Motor vehicles
2010 $
1 January MV1 26 000
1 July MV2 18 000
2011
1 April MV3 24 000
Equipment
2010
1 January EQ1 30 000
2011
1 January EQ2 44 000
Amirtha has a policy to depreciate motor vehicles at 20% per annum on cost (straight
line method) and equipment at 15% per annum on cost (straight line method), rates
being charged for each month of ownership.
REQUIRED
(a) Calculate the total depreciation for each of the years 2010 and 2011.
(i) Motor vehicles
(ii) Equipment
Early in 2012, consideration was given to changing to the reducing (diminishing)
balance method, with the following rates applying to the balance at the end of each
year.
Motor vehicles 25%
Equipment 20%
A full year’s depreciation would be charged irrespective of the date of purchase.
REQUIRED
(b) Calculate the total depreciation for each of the years 2010 and 2011, using the
reducing (diminishing) balance method for:
(i) Motor vehicles
(ii) Equipment
The original profits for the first two years in business were:
2010 $86 000
2011 $94 000
REQUIRED
(c) Prepare a statement to show the revised profits for the years 2010 and 2011, if
the reducing (diminishing) balance method had been used.
