3/11 QUESTION 2: 100% + | John Ltd is a manufacturing company. Plant and machinery at 31 March 2021 comprise two items, a machine costing 40,000, purchased on 1 April 2018, and another machine costing 10,000, purchased on 1 April 2019. Depreciation is on the I basis of 15% reducing balance per year. At 31 January 2021 the machinery, purchased on 1 April 2019 was disposed of for 4,500 in cash. No aspect of the disposal transaction has yet been recorded. A full year's depreciation is charged in the year of acquisition, and none in the year of disposal. REQUIRED: (a) Calculate the opening cost and opening accumulated depreciation for plant and machinery at 1 April 2020. (5 marks) (b) Calculate the depreciation expense for the year ended 31 March 2021. (5 marks) (c) Calculate what would appear in the statement of profit or loss for the year ended 31 March 2021 relating to the disposal of plant and machinery. (d) Calculate the closing cost and accumulated depreciation for plant and machinery at 31 March 2021. (5 marks) (5 marks) (e) A director of John Limited does not understand how a rival company that operates an identical business can depreciate all of its machinery on a straight-line basis of 5% of cost. She estimates that her company could report 3/11 - 100% + | REQUIRED (a) Calculate the opening cost and opening accumulated depreciation for plant and machinery at 1 April 2020. (5 marks) (b) Calculate the depreciation expense for the year ended 31 March 2021. (5 marks) (c) Calculate what would appear in the statement of profit or loss for the year ended 31 March 2021 relating to the disposal of plant and machinery. (d) Calculate the closing cost and accumulated depreciation for plant and machinery at 31 March 2021. (5 marks) (5 marks) (e) A director of John Limited does not understand how a rival company that operates an identical business can depreciate all of its machinery on a straight-line basis of 5% of cost. She estimates that her company could report higher profit if it used the same accounting policy for depreciation as the rival company. Explain to the director why it might be justified for the two companies to have different accounting policies for depreciating their machinery. a a 9 (5 marks) (Total: 25 marks) Please turn over