964 Damaged items (1,700 - 300 - 100) 1,300 Goods on approval 3,000 82,000 * Inventory is valued at lower of cost and net realisable value. Here, cost is 2 1,800 but NRV is? 1,300. Therefore, the value of damaged items will be ? 1,300, 3. Depreciation Illustrative Example 4 JK is the sole proprietor of a business which is involved in the purchase and resale of software packages for use on personal computers. He is currently engaged in preparing his annual accounts for the year ended on 31st December, 2016, and has asked your assistance for calculating the amount of depreciation for the year 2016. The following information is available in respect of fixed assets. As at 1st January, 2016, the original cost and accumulated depreciation of the fixed assets held by the business were as follows: Asset Original Cost (3) Accumulated Depreciation (3) Buildings 3,56,782 1,55,985 Furnitures 1,01,545 46,328 Motor Vehicles 92,874 51,301 Total 5,51,201 253,614 During the year, the business acquired new assets as follows: Asset Six Months to 30th June 2016 (2) Six Months to 31st December, 2016 (3) Total Buildings 65,800 65,800 Furnitures 27,385 10,100 37.485 Motor Vehicles 28.954 28.954 Total 56,339 75,900 1,32 239 During the year, the following fixed asset disposals were made : Asset Original Cost Accumulated Depreciation at Proceeds 31st December, 2015 () Furnitures --- 7th April, 2016 6,300 2.1 2,00 10th September, 2016 31,907 10,548 52,058 Motor Vehicles - 31st August, 2016 21,560 10,870 Total 59,767 23,593 68,358 The fixed assets are depreciated on a straight-line basis and to an estimated residual value of zero over the following economic lives : Buildings 20 years Furnitures 7 years Motor Vehicles 4 years Depreciation is calculated on a semi-annual basis, with a full six months charge in the half-year of acquisition and no charge in the half-year of disposal. You are required to calculate the amount of depreciation for the year 2016. 14,300