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23. S unshine Ltd is a food processing company. It has just purchased, on 1 January 2016, a canning machine. The machine costs 24,000 and
23. S unshine Ltd is a food processing company. It has just purchased, on 1 January 2016, a canning machine. The machine costs 24,000 and is estimated to have a 5-year life with a residual value of 2,000. (a) Prepare a table of depreciation charges and net book value over the S-year life using straight-line depreciation. 17 marks] (b) Using the straight-line method of depreciation, explain the effect on the accounting equation of selling the asset at the end of Year 5 for a price of 2,500. [7 marks] (c) The recognition of depreciation is an illustration of the accruals concept. Explain. [6 marks] [Total 20 marks] N11123-E1 Turn Over
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