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

Paid 5, what is the explanation?

what is the explanation?

Managerial uses of the primary ratio, The return on investment has been apt...

The return on investment has been aptly about as a primary ratio as it gives the relative net profit earned on the capital utilized. It is one particular measure where the last out

Determine out the future value, Determine out the future value of Rs.1000 c...

Determine out the future value of Rs.1000 compounded yearly for 10 years at an interest rate of 10 percent. Solution: The future value 10 years thus would be FV = PV (1+k)

Record these transactions in the accounting equation, March and has already...

March and has already accumulated $30,000 in manufacturing costs, Job B and order for 10,000silver medallions, was not started until April. Transactions for these jobs are the foll

Identify total proceeds from new securitizations, Refer to Note 8, Securiti...

Refer to Note 8, Securitization Transactions (pp. 78-80) and an extract from Note 2, Additional Balance Sheet and Cash Flow Information (p. 72-73) from the Consolidated Financial S

Quarterly cash dividends are planned, Given the information that follows, d...

Given the information that follows, draw a cash budget for the XYZ Store for the first six months of 2012. Every prices and costs remain constant. Sales are 80% for credit

What do you mean by franchise, Q. What do you mean by Franchise? Franch...

Q. What do you mean by Franchise? Franchise - Legal arrangement whereby owner of a franchisor, trade name, contracts with a party who wants to use the name on a non-exclusive b

Quarterly cash payments budget, Emily Jackson, RSC Designs management accou...

Emily Jackson, RSC Designs management accountant, is in charge of preparing the master budget for 2013.  She has gathered the following information: 1. Annual profit for the 201

Steps required to do the arbitrage. , John Chan considers buying a six-mont...

John Chan considers buying a six-month stock futures contract on the shares of Li & Fung Limited. Shares of Li & Fung Limited are now trading at $50 per share and it is expected th

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