The beginning balance in the Machinery control account and Accumulated Depreciation account, and dates in the accounts for various machinery acquisitions and disposals during the year by Liu Ltd are presented below.

Liu Ltd records depreciation to the nearest month.

At 1 January 2019, the company held only four items of machinery, and four exchange transactions took place during 2019 as indicated below.

At the dates of acquisition, the useful lives and residual values of the new machines were as follows.

Straight‐line depreciation is used by the entity.

Required

(a) Prepare in Liu Ltd’s accounting records the journal entries (in general journal format) for the acquisition, disposal and depreciation charges for the period 1 January to 31 December 2019.

(b) Prepare the Accumulated Depreciation account for the period 1 January 2019 to 31 December 2019.

(c) Provide reasons, by referring to appropriate accounting standards, for an entity adopting the straight‐line method for depreciating its machinery.

Transcribed Image Text:

Machinery 1/1/19 Balance 93 500 11/1/19 11/1/19 25/1/19 25/1/19 28/4/19 28/4/19 31/8/19 31/8/19 31/12/19 Balance Accumulated Depreciation 11/1/19 1/1/19 Balance 69 700 25/1/19 11/1/19 28/4/19 25/1/19 31/8/19 28/4/19 31/12/19 Balance 31/8/19 31/12/19