Simon depreciates his machinery at a rate of 20% per annum on a reducing balance basis. Fie provides a full year’s depreciation in the year an asset is acquired, and no depreciation expense is recorded in the year of disposal. At 1 November 2010, the cost of Simon’s machinery was $140 900, and the carrying value was $94 570. During the year to 31 October 2011, a machine that had cost $35 000 and had been fully depreciated with $5000 residual value was traded in for a new machine. The price of the new machine was $50 000 and the trade-in value was $14 000. At 31 October 2011 the balance of the cost of the new machine was still outstanding.

(a) Calculate the depreciation charge for machinery for the year to 31 October 2011.

(b) Show the following ledger accounts for the year:

(i) Machinery at cost

(ii) Accumulated depreciation

(c) Calculate the total depreciation expense to be reported in the statement of comprehensive income for the year to 31 October 2011 in respect of machinery.

(d) State the balances to be reported in the statement of financial position as at 31 October 2011 as a result of these transactions. [ACCA adapted]