Reference no: EM133513475

The following assets were owned by Papanui Earthmoving Limited as at 1 April 2016.

Asset 1 x bulldozer

1 x bitumen machine

1 x digger

12 x electric drills (pooled)

Depreciation Rate 15% DV

18% DV 12% DV 50% DV

Cost $128,500 $173,600 $83,550 $4,800

Adjusted Tax Value $78,900

$64,350 $56,560 $1,600

All of the above assets are used exclusively by the company in the carrying on of their earthmoving business. The company has a 31 March balance date.

During the 2017 income year, the following transactions occurred:

• The bulldozer in the above table was sold in July 2016 for $130,000.

• A new bulldozer was bought on 5 October 2016 for $150,000.

• The digger was sold in March 2017 for $49,560.

• Five (5) new electric drills were purchased in January 2017. Each drill cost $600. Eight  (8) drills, which were sold in July 2016 for a total of $2,800, were part of the existing electric drill tax depreciation pool listed in the above table.

• Two-hundred and fifty (250) new diamond drill bits were purchased in February 2017 for $7,500. For diamond drill bits, the diminishing value (DV) depreciation rate is 50% and the straight line (SL) depreciation rate is 65%.

These assets are to be accounted for as part of a new pool of assets for depreciation purposes.

Calculate the annual depreciation charge for Papanui Earthmovers Limited for the income year ended 31 March 2017 including the adjustments upon the sale of any depreciable asset.