Reference no: EM132519060

On January 1 2017 ,KCM acquired a plant asset which has an estimated useful life of 5 years .Below is the depreciation schedules for this asset which have been prepared using three different methods these are ,1)sum-of-the-years'-digits method (2) the straight-line method, (3) the double-declining-balance method.

Year                   Sum of the years digits     Straight line                         Double -Declining balance

2017                      277,500                      166,500                               370,000

2018                      222,000                       166,500                                 222,000

2019                         166,500                     166,500                              133,200

2020                         111,000                    166,500                              79,920

2021                           55,500                      166,500                           27,380

Total                              832,500                     832,500                       832,500

Required

Question (a) State the cost of this plant asset being depreciated by KCM? And show the double entry to record this transaction on January 1 2017.

Question (b) State the residue value of the plant asset if any?

Question (c1) Which method will give the lowest profit before tax in 2017?

Question (c2) Which method will produce the highest book value for the asset at the end of 2019?

Question (d) Assume that KCM decided to sell this asset at the end of 2019, Calculate the gain or loss on disposal, which method would give the highest gain (or lowest loss) on disposal of this plant asset? Show the Journal entries relating to this disposal.