A. Prepare an entry for disposal of machinery on 17 August 2019. Show all workings. (5 marks)

B. Calculate the net book value for every non-current asset as at 31 December 2019. (7 marks)

CONFIDENTIAL QUESTION 2 Vermont Incorporation runs a manufacturing business. The information on its non-current assets at 1 January 2019 is shown below. Non-current assets Acquisition cost ($) Accumulated depreciation ($) 26 400 52 200 Net book value ($) 193 600 86 400 220 000 Factory premises Machineries 138 600 During the year 2019, the following transactions took place. 1. Disposal of one of its machineries: Date Machinery Initial cost ($) Year of purchase 2016 Proceeds from disposal ($) 7 100 17 August Machinery 01 14 000 2. Addition of a secondary vehicle: Date Vehicle Initial cost ($) Residual value ($) 1 600 Estimated unit of services 140 000 miles 1 October Vehicle 01 16 440 Additional information. 1. Depreciation on the factory premises is charged based on 5% of the net book value. 2. Depreciation on the machineries is charged on a straight-line method based on five- year life and an estimated residual value of 10% of the original cost. 3. Depreciation on the vehicle is charged based on units of services. The usage of the vehicle as at 31 December 2019 was 8 000 miles. 4. It is the policy of the company to charge a full year's depreciation in the year of purchase but none in the year of disposal. 6