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

Prepare a report addressing adjust financial statements, You are the audito...

You are the auditor of a small private company called XYZ Limited. Last year, which was 20X9, the audit went smoothly and every balance on the financial statements was correct. Thi

Present value of a perpetuity, PVA ∞ = A(1 + k) -1 +  A(1 + k) -2 +..... ...

PVA ∞ = A(1 + k) -1 +  A(1 + k) -2 +..... + A(1 + k ) ∞ + 1 + A (1 + k) ∞ Multiplying both the sides of Eq (a7) by (1+k) provides: PVA ∞  = (1 +k) = A(1 +k) +A (1 +k)

IFRS vs Gaap, #questBackground: The SEC set up the Work Plan which sets for...

#questBackground: The SEC set up the Work Plan which sets forth specific areas and factors to consider before potentially transitioning our current financial reporting system for U

Assignments of book debts-bankruptcy and liquidation, Assignments of book d...

Assignments of book debts The trustee can set aside an assignment of existing or future book debts, whether absolute or by way of charge, unless the assignment was registered a

Cash flow statement, does closing balance of cash flow statement equals to ...

does closing balance of cash flow statement equals to cash in balance sheet

Lenders evaluation, Lenders'  evaluation:   Current  Assets  to  Current  L...

Lenders'  evaluation:   Current  Assets  to  Current  Liabilities,  Quick  Assets  that is current assets minus inventories to Current Liabilities, Long term Debt to Net Assets, to

Business risk in company, Q. Business risk in company? Business risk is...

Q. Business risk in company? Business risk is the likelihood of a company experiencing changes in the level of its profit before interest as a result of changes in turnover or

Primary restriction of making demand, Q. Primary restriction of making dema...

Q. Primary restriction of making demand? The primary restriction of making demand forecasts lies in the fact that they are forecasts and hence their reliability is unknown. Mos

Illustration of consolidated cashflow statements, Illustration of consolida...

Illustration of consolidated cashflow statements The voice of the Nation Limited is a Nairobi based media company. Its Consolidated Income Statement for the year ended 30 April

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