A depreciation method that uses the capital cost, effective life and residual value is the:

Capital expenditure is:

What does the Accumulated depreciation account represent?

Office equipment purchased for $8000 (net of GST) has an expected life of five years with a residual value at the end of five years of $1000 (net of GST). The depreciation charge for year four applying the straight line method would be:

Factory plant purchased for $65 000 (net of GST) has an expected residual value of at the end of eight years of $8000 (net of GST). The depreciation charge for year three applying the diminishing balance method at a rate of 20% would be:

Task : 2

What is the difference between the profit and loss account and the income statement?

Why are prepayments classified as assets?

What are the two types of balance day adjustments?

Task : 3

Property, Plant and Equipment Register AND a Disposal Register

A Dissan utility was purchased for $38 500 (incl. GST) on 1 July 2015 from HJK Motors. Depreciation is to be calculated by the straight line method. The utility was expected to have a three year life, at the end of which it was estimated to have a residual value of $10 000 (excluding GST). When not in use the utility was kept in the warehouse.

The utility was sold to RTY Builders at the end of three years (30 June 2018) for $11 550 (incl. GST). After completing the Plant register, make the necessary entries in the Disposal register

Task : 4

Correct errors

Give example of errors that effect trial balance and errors, which does not affect trial balance. Show the required journal entry with narration for correcting the errors in recording the following transactions:

Purchase goods from Jonathan for $400.00 was recorded correctly in purchase journal but posted in Yonathans account.