Reference no: EM132676069
Scenario Details:
Computer equipment on credit for $40,000 plus GST.
New factory land for $100,000 plus GST.
On 31 December 2014, Simco Textiles Pty Ltd purchased the following fixed assets:
New textile equipment for $25000 plus GST.
Organisational policies and procedures for Simco Textiles Pty Ltd states the following for depreciation:
- All computer equipment must be sold within three years of purchase
- Any equipment purchased should be serviced every year and the service fee should be recorded on the asset register card.
- The land will be recorded at cost and will not be depreciated. A separate asset register card need not to be maintained for the same.
- Depreciation on computer equipment should be calculated using the diminishing balance method
- The profit / loss needs to be clearly recorded on the asset register card at the time of disposal
- Depreciation on textile equipment should be calculated using the straight-line method
Problem 1 : Make a detailed Asset Register Card with complete depreciation schedule for the above fixed assets.
a) Record the depreciation and disposal of the non-current assets as per the above organisational procedures and policy information and in accordance with legislative requirements
b) Complete the general journal entries for the disposal of assets along with recording of profit/loss on sale of the asset
To assist with completing the Asset Register Care, you will need to:
Calculate depreciation on the computer equipment for the financial years ended 30 June 2015, 2016 and 2017.