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ACC102: Fundamentals of Accounting- Report Writing Assignment
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Internal Code: MAS1252
Question 2: Depreciation of Machinery
Required:
A. As the accountant for Admirable Ltd, prepare separate depreciation schedules for the machinery for the 5-year period, using the following depreciation methods: (a) straight-line, (b) diminishing- balance, (c) sum-of-years-digits, and (d) units-of-production. Use the following headings for each schedule: 'Year ending 30 June', 'Annual depreciation expense', 'Accumulated depreci- ation', 'Carrying amount at end of year'.
B. Prepare a report for management, stating the advantages and disadvantages of each depreciation method. Include in the report your recommendations on the choice of method consistent with the requirements of IAS 16/AASB 116. Support your recommendations with schedules showing the total annual cost of operating the machinery, and the profit after depreciation.
Question 3: Disposal and Revaluation Increases and Decreases
On 1January 2011, Punchbowl Ltd bought a machine for $33 000 cash; its useful life was 12 years and its residual value was $3000. It was decided to depreciate the machine by the straight-line method. On 30 September 2013, the machine was traded in to Leichhardt Ltd for a new model, the total cost being $25 000. Leichhardt Ltd allowed $17 000 for the old machine. It was decided to depreciate the new machine at the rate of 45% p.a. by the diminishing-balance method. Residual value of the new machine was $7000.
On 1 July 2014, Punchbowl Ltd decided to adopt the revaluation model and revalue its machine upwards to reflect fair values. This represented a 15% increase in the carrying amount of the machine. The diminishing-balance method of depreciation was continued at the same rate. The accounting period ended on 30 June each year. At 30 June 2015, the carrying amount of the machine was approximately equal to fair value.
Required
A. Prepare relevant ledger accounts to record the above transactions up to 30 June 2015. Ignore GST.
B. Show how the asset would appear in the financial statements of Punchbowl Ltd as at 30 June 2012, 30 June 2014 and 30 June 2015.
C. Show the Machinery account and Accumulated Depreciation -Machinery account if the revaluation on 1July 2014 had been downwards instead of upwards.
Report Writing Assignment:
Question 1: Perpetual Inventor Y System with Returns
Question 2: Depreciation of Machinery
Required:
A. As the accountant for Admirable Ltd, prepare separate depreciation schedules for the machinery for the 5-year period, using the following depreciation methods: (a) straight-line, (b) diminishing- balance, (c) sum-of-years-digits, and (d) units-of-production. Use the following headings for each schedule: 'Year ending 30 June', 'Annual depreciation expense', 'Accumulated depreci- ation', 'Carrying amount at end of year'.
B. Prepare a report for management, stating the advantages and disadvantages of each depreciation method. Include in the report your recommendations on the choice of method consistent with the requirements of IAS 16/AASB 116. Support your recommendations with schedules showing the total annual cost of operating the machinery, and the profit after depreciation.
Question 3: Disposal and Revaluation Increases and Decreases
On 1January 2011, Punchbowl Ltd bought a machine for $33 000 cash; its useful life was 12 years and its residual value was $3000. It was decided to depreciate the machine by the straight-line method. On 30 September 2013, the machine was traded in to Leichhardt Ltd for a new model, the total cost being $25 000. Leichhardt Ltd allowed $17 000 for the old machine. It was decided to depreciate the new machine at the rate of 45% p.a. by the diminishing-balance method. Residual value of the new machine was $7000.
On 1 July 2014, Punchbowl Ltd decided to adopt the revaluation model and revalue its machine upwards to reflect fair values. This represented a 15% increase in the carrying amount of the machine. The diminishing-balance method of depreciation was continued at the same rate. The accounting period ended on 30 June each year. At 30 June 2015, the carrying amount of the machine was approximately equal to fair value.
Required
A. Prepare relevant ledger accounts to record the above transactions up to 30 June 2015. Ignore GST.
B. Show how the asset would appear in the financial statements of Punchbowl Ltd as at 30 June 2012, 30 June 2014 and 30 June 2015.
C. Show the Machinery account and Accumulated Depreciation -Machinery account if the revaluation on 1July 2014 had been downwards instead of upwards.