Question
At 1 October 2002 Jim had fixed assets as follows: Freehold Land Building Machinery Cost 85,000 120,500 74,800 Accumulated depreciation nil 128,920 35,600 Jim's policy
At 1 October 2002 Jim had fixed assets as follows:
Freehold Land | Building | Machinery | |
Cost | 85,000 | 120,500 | 74,800 |
Accumulated depreciation | nil | 128,920 | 35,600 |
Jim's policy is to provide for a full year's depreciation in the year of acquisition, but no provision is made in the year of disposal Depreciation is provided at the following rates
Land | nil |
Buildings | written off over 25 years, on the straight line basis |
Machinery | 20% per annum, on the reducing balance basis |
During the year to 30 September 2003, Jim added an extension to the buildings at a cost of $6,800. He also acquired a new machine, by paying the dealer $9,000 by cheque and trading in an old machine for $5,500.
The machine traded in had been acquired in January 2000 at a cost of $11,000 Jim has asked why depreciation is not charged on the land, but is charged on other fixed assets.
Required:
(a) As at 30 September 2003, calculate:
(0) The value of Jim's non-current assets, before deducting depreciation;
(ii) The accumulated depreciation;
(ii) The net book value of non-current assets.
(b) Calculate the profit or loss on the machine which was traded in.
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