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Easi Ltd. Co. owns $800,000 worth of machinery with an accumulated depreciation of $275,000 as at 1 May 2021. During the year ended 30 April
Easi Ltd. Co. owns $800,000 worth of machinery with an accumulated depreciation of $275,000 as at 1 May 2021. During the year ended 30 April 2022, a heavy-duty machine of $180,000 was purchased on 1 November 2021. An additional $30,000 was paid for installation and $10,000 for testing the new machine. A one-year maintenance contract was taken out at a cost of $3,400. It is Easi Ltd. Co.'s policy to charge depreciation at the rate of 20% on the straight-line basis. (i) (ii) Name ONE (1) criteria to distinguish between capital and revenue expenditure. (1 mark) Compute the depreciation expense for the machinery to be shown in the Statement of Comprehensive Income for the year ended 30 April 2022. (iii) (2 marks) What is the net book value to be shown on the Statement of Financial Position as at 30 April 2022? (2 marks)
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