Question
During the year ended 31 December 2020, the following transactions took place: a. Purchased an office equipment in March at a cost of RM9,600. The
During the year ended 31 December 2020, the following transactions took place: a. Purchased an office equipment in March at a cost of RM9,600. The installation cost incurred was RM800.
b. Sold an office equipment in February for RM3,200. It had originally been purchased in January 2018 for RM6,800.
c. Purchased a new van in May for RM83,000. d. Traded-in an old motor vehicle in August which had been purchased in June 2017 for RM48,000. The list price for the new motor vehicle was RM57,000, but KURNIA Trading only paid RM45,000 as they received a trade-in allowance of RM12,000 on the old motor vehicle.
e. Carried out major repairs to some old equipment in November costing RM16,000. This included a new motor costing RM7,000 which increased the efficiency of the equipment by 200 percent.
f. Sold a building that had a cost of RM655,000 in December. The building was originally purchased in August 2010. KURNIA received RM115,000 cash and a RM405,250 note receivable for the sale.
g. Trademarks of RM100,000 was obtained in July 1, 2020 and has a useful life of 20 years. The acquisition of the intangible assets has been recorded.
The company provides a full years depreciation on non-current assets held at the end of each year and none in the year of disposal. The company uses the following method and rates in providing depreciation: Building 2% per annum, straight line method Motor vehicles 20% per annum, declining balance method Equipment 25% per annum, straight line method
Required: 1. Prepare relevant journal entries for the above transactions. 2. Determine the depreciation expenses for the year and show the journal entries. 3. Briefly discuss the general rule for deciding whether to capitalize or expense cost of assets.
KURNIA Ltd prepares accounts to 31 December each year. On January 1, 2020, it had the following balances on its non-current assets accounts Debit (RM) Credit (RM) Building 2,200,000 Motor Vehicles 282 000 Equipment 88 400 Accumulated depreciation - Building 660,000 Accumulated depreciation - Motor vehicle 73,000 Accumulated depreciation - Equipment 54.000Step by Step Solution
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