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Black Smith plc had the following fixed assets at 31 December 2012 Cost to date Accumulated depreciation to date so00 s00 Freehold land and buildings* Plant and machinery 1,200 640 400 210 Motor vehicles 275 135 *(Land cost $200,000; building costs $1,000,000) The depreciation policy of the company is to provide for depreciation as follows: Freehold land and buildings Plant and machinery 2% p.a straight line 15% p.a straight line 20% p.a straight line Motor vehicles During the year 31 December 2013 the following events occurred: 1. On 01 January 2013, the freehold property was professionally revalued by Billvard and Billvard, chartered surveyors, at $1,800,000, of which $400,000 was attributable to the land. The building were estimated to have a further useful life of 25 years. 2. Plant and machinery: original cost $140,000, scrap value $5,000 and written down value $40,000. 3. New plant and machinery was acquired at a cost of $240,000 on 01 April 2013. 4. Motor vehicles which had cost $35,000 were sold for $15,000, making a profit on disposal of $5,000. 5. New motor vehicles were purchased on 01 July 2013 at a cost of S80,000 At a meeting of the directors on 01 December 2012, the sales director suggested that as freehold property tended to appreciate in value, no depreciation need be provided in future years on that property. The personnel director suggested that it would be more prudent to continue with the depreciation policy followed hitherto for freehold property. After a lengthy discussion, the directors agreed that the freehold property should be depreciated on a generally accepted accounting principle.