Reference no: EM133074279

Question - At 1 October 2002 Jim had fixed assets as follows:

	Freehold Land	Building	Machinery
Cost	85,000	120,500	74,800
Accumulated depreciation	nil	128,920	35,600

Jim's policy is to provide for a full year's depreciation in the year of acquisition, but no provision is made in the year of disposal Depreciation is provided at the following rates

Land	nil
Buildings	written off over 25 years, on the straight line basis
Machinery	20% per annum, on the reducing balance basis

During the year to 30 September 2003, Jim added an extension to the buildings at a cost of $6,800. He also acquired a new machine, by paying the dealer $9,000 by cheque and trading in an old machine for $5,500.

The machine traded in had been acquired in January 2000 at a cost of $11,000 Jim has asked why depreciation is not charged on the land, but is charged on other fixed assets.

Required -

(a) As at 30 September 2003, calculate:

(i) The value of Jim's non-current assets, before deducting depreciation;

(ii) The accumulated depreciation;

(ii) The net book value of non-current assets.

(b) Calculate the profit or loss on the machine which was traded in.