DEF Ltd. is a manufacturing company that produces custom-made furniture. Thecompany'syear-end is31 December.

Youarepresentedwithanextractof thefinaltrialbalance ofDEFLtd.forthefinancialyearended 31 December2022:

AccountNote

Debit/(Credit)

(R)

Land -Cost2000000Machinery-Cost14000000Machinery-AccumulatedDepreciation(1000000)Vehicles -Cost22000000Vehicles-AccumulatedDepreciation(360000)Equipment -Cost31000000Equipment-AccumulatedDepreciation(160000)

The following information still needs to be recorded for thecurrentfinancial yearending31 December2023:

Notes:

1. Machinery

Theexistingmachinery isdepreciatedusingthestraight-linedepreciationmethodoveraperiod of8years, with noresidual value.

On1February 2023,thecompanypurchasedanew lasercutting machineforR2 500 000. In addition, installation costs of R50 000 were incurred. The manager in charge of overseeing theinstallationofthe machinereceived a monthly salary ofR40000.Themachinewasreadyforuseon1March2023.Theusefullifeofthelasercutting machine is 5 years, with no residual value, and thestraight-linedepreciationmethod will be applied. This machine has a shorter life span than the rest of themachineryofthe business.

On1August2023,thecompany importedanewCNCmachine fromGermanyfor

200,000, FOB shipping point. The exchange rate on that day was R16: 1. Theshipmentarrived atCapeTownharbouron1September2023.Theexchange rateonthat day was R17: 1. On 1 September 2023, the company incurred additional costsof R25 000 for customs duties and shipping. The company started using the machineon 1 September 2023. The CNC machine has a useful life of 8 years and no residualvalue.Thestraight-line depreciationmethodisapplicable.

1. Vehicles

Existing vehicles are depreciated using the straight-line depreciation method over aperiodof 5years,witha residualvalue of10% on thetotal costprice.

On 1 May 2023, the company purchased and started using a new delivery truck forR400 000. The truck has a useful life of 5 years and a residual value of R40 000. Thestraight-linedepreciationmethod isapplicable.

1. Equipment

Existing equipment is depreciated using the diminishing balance method at a rate of20%per year,with aresidual valueof R100000.

On 1 October 2023, the company purchased an improvement part on the existingequipmentinthefactory forR330000,witharesidualvalue ofR30000.Thepartwassuccessfully installed and fully functional on the same day. The replacement part isdepreciatedusingthediminishingbalancemethodatarate of20% peryear.

Additionalinformation:

• IgnoreVAT.
• Thecompanyhascredittermsestablishedwithallofitssuppliers andpurchasesallassetsexclusively on credit.

1. Prepare the generalledgeraccount forMachinery-Cost of DEF Ltd. for thefinancialyearended31December2023.Theaccountmustbeclosed off.

(8marks)

2. PreparethegeneralledgeraccountforMachinery-AccumulatedDepreciationof Machinery-Asset of DEF Ltd. for the financial year ended 31December2023. The accountmustbe closedoff.

3. Prepareallthegeneraljournalentriesto accountforallvehicle-relatedtransactionsofDEFLtd. for thefinancialyear ended31December2023.

(10 marks)

4. Prepareallthegeneraljournalentriesto accountforallequipment-relatedtransactionsofDEFLtd. for thefinancialyear ended31December2023.

(10 marks)

5. PreparethereconciliationnoteforProperty, Plant,andEquipment, focusingspecificallyontheMachinery categoryonlyas at31 December2023.