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

Financial accounting theory, This assessment item may be completed either i...

This assessment item may be completed either individually or in groups of two (2) students.  The group mark on both assessment items will be given to both students.  Please ensure

Calculate the return on sales and asset turnover, Calculate the Return on S...

Calculate the Return on Sales and Asset Turnover 1. Complete a trend analysis for the items below for the last three years using the earliest year as the base year. Cash

Explain what happens if a swap is used ineffectively, The key criterion for...

The key criterion for qualifying as a hedge is that the hedging relationship must be highly effective in achieving offsetting changes in fair values or cash flows based on the hedg

Calculate the risk premium , Question: Zelo, Inc. stock has a beta of 1...

Question: Zelo, Inc. stock has a beta of 1.23. The risk-free rate of return is 4.5% and the market rate of return is 10%. What is the amount of the risk premium on Zelo stock?

What do you mean by earnings per share, Q. What do you mean by earnings per...

Q. What do you mean by earnings per share? Anti-dilution - Condition which may increase computation of EARNINGS PER SHARE (EPS)or decrease loss per share solely due to the incl

Calculate the earnings per share, Q. Calculate the earnings per share? ...

Q. Calculate the earnings per share? Dividend cover is a measure of the relationship among dividends and earnings and may be calculated for the whole company or on a per share

Public oversight board, Public Oversight Board (POB) - POB is an independen...

Public Oversight Board (POB) - POB is an independent oversight board, composed of public members that monitors and evaluates peer reviews conducted by SEC Practice Section (SECPS)

The brownstone corporation''s bonds , a) What will be the value of every of...

a) What will be the value of every of these bonds when the going rate of interest is 12%? Suppose that there is only one more interest payment to be made on Bond S. Round your answ

Determine current stock price & current dividend of company, 1. Select a pu...

1. Select a publicly traded company (preferably manufacturing oriented; do not use a financial services company such as a bank or a bank holding company) and obtain a copy of their

What do you eman by lease, Q. What do you eman by Lease? Lease - Convey...

Q. What do you eman by Lease? Lease - Conveyance of buildings orland, equipment or other ASSETS from one person (LESSOR) to another (LESSEE) for a specific period of time for m

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