At 1 July 2015, ABC Co has motor vehicles cost $345,000, with a net book value of $274,300. During the year to 30 June 2016, a motor vehicle which had cost $87,000, which had been
depreciated for three years, was traded in for a new motor vehicle. The new motor vehicle costs $100,000, and the trade in value was $45,000. The balance of the cost of the new
motor vehicle was outstanding at 30 June 2020.
ABC Co depreciates its motor vehicles at a rate of 20% per annum on a reducing balance basis. A full year’s depreciation in the year of acquisition is provided for, and no depreciation is charged in the year of disposal.
Required:
(A) Calculate the profit or loss on the motor vehicle traded in.
(B) Calculate the depreciation charge for motor vehicles for the year to 30 June 2020.
(C) Show the following ledger accounts for the year:
(i) Motor vehicles at cost;
(ii) Accumulated depreciation.
(D) Calculate the total charge to be reported in the statement of profit or loss for the year ended 30 June 2016 in respect of the motor vehicles.
(E) State the balances to be reported in the statement of financial position as at 30 June 2016 as a result of these transactions.