Depreciation, financial position and management decision making On 1 January 2022, Ormond Ltd purchased a van which is estimated to have a \($9,000\) residual value and a useful life of 5 years. On 1 July 2023, the company purchased new machinery which is estimated to have a residual value of \($15,000\) and a useful life of 6 years. The following is an extract from the statement of financial position showing the carrying amounts of these assets at 30 June 2025.

Required

(a) For each asset, calculate the percentage of useful life expired.

(b) What decisions will management need to make in the next financial year?

(c) Prepare the journal entries to record depreciation expense at 30 June 2026.

(d) Prepare an extract from the Statement of Financial Position at 30 June 2026 (assuming no new assets have been purchased).

Transcribed Image Text:

Ormond Ltd Statement of Financial Position (extract) Non-Current Assets as at 30 June 2025 Property, plant and Equipment: Plant and equipment (at cost) less accumulated depreciation 135 000 40 000 95 000 Van 48 000 less accumulated depreciation 27 300 20 700 115 700