Write up the necessary ledger accounts, Financial Accounting

Assignment Help:

Question:

Agatha Co. is a trading company making up its accounts regularly to 31 December each year.

At 01 January 2005 the following balances existed in the records of Agatha Co.
                                                                                                Rs 000`s

Freehold Buildings - Cost                                                            500
Accumulated depreciation on buildings to 31.12.2004                210
Office equipment - Cost                                                               40
Accumulated depreciation on Office equipment to 31.12.2004    24

The company`s depreciation policies are as follows:

Freehold building - depreciation allowed at 2% per annum on cost on the straight line basis

Office equipment - depreciation allowed at 12.5% per annum on the straight line basis.

A full year's depreciation is charged in the year of acquisition of all assets and none in the year of disposal.

During the two years to 31 December 2006 the following transactions took place.

Year ended 31 December 2005.

(i) 10 June - Office equipment purchased for Rs 16,000. This equipment was to replace some old items which were given in part exchange. Their agreed part exchange value was Rs 4,000. They had originally cost Rs 8,000 and their book value was Rs 1,000. The company paid the balance of Rs 12,000 in cash.

(ii) 8 October - An extension was made to the building at a cost of Rs 50,000 Year ended 31 December 2006 1 March - Office equipment which had cost Rs 8,000 and which had a written down value of Rs 2,000 was sold for Rs 3,000.

Required:

(a) Write up the necessary ledger accounts to record these transactions for the two years ended 31 December 2006.

(b) Provide three reasons why depreciation might occur.

(c) Explain briefly two methods of calculating depreciation.

(d) In what way do you think that the concept of consistency applies to depreciation?


Related Discussions:- Write up the necessary ledger accounts

Objectives of time value of money, After going through this section, you mu...

After going through this section, you must be capable to: -          Identify the time value of money; -          Know what gives money its time value; -          Identify

Cost of equity and corporate taxes, 1. Firm L has debt with a market value ...

1. Firm L has debt with a market value of $200,000 and a yield of 9%. The firm's equity has a market value of $300,000, its earnings are growing at a rate of 5%, and its tax rate i

Calculating present value, Calculating Present Value [LO2]  You have just r...

Calculating Present Value [LO2]  You have just received notification that you have won the $1 million first prize in the Centennial Lottery.  However, the prize will be awarded on

Revenue recognition, Revenue recognition is a joint project of financial ac...

Revenue recognition is a joint project of financial accounting standard board and international accounting standard board.1.identify the roles and objectives of FASB and IASB?.2. W

What is auditors report explain, Q. What is Auditors report explain? Sp...

Q. What is Auditors report explain? Special Report - Special report is a term used for Auditors' reports issued in connection with various types of financial presentations, inc

Bond''s yield to maturity, A 15-year, 14% semiannual coupon bond with a par...

A 15-year, 14% semiannual coupon bond with a par value of $1,000 may be known as in 4 years at a call price of $1,075. The bond sells for $1,050. (Suppose that the bond has just be

Features of the torrens title system, Answer both parts of this question. E...

Answer both parts of this question. Each part is worth seven and a half marks each. (a) Describe the features of the Torrens Title system of land registration and compare them t

Reserve requirement , 2(i). If all depositors tried to convert their deposi...

2(i). If all depositors tried to convert their deposits into cash at once, they would find that there are not sufficient reserves in the system to permit all of them to do this at

Describe about trade test, Q. Describe about Trade Test? With a view of...

Q. Describe about Trade Test? With a view of perform the work in a trade an artisan staff should have the skill required for the trade and for this Railway workers classificati

Sales, what is recorded sales on account of 3,280

what is recorded sales on account of 3,280

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd