Lecture 4 Exercises 12.12 You bought a lorry for $5,000. Its useful life is estimated at four years. The residual value is expected to be $1,000 after the four years. Required: Work for Year 1 and Year 2 only: (a)Calculate depreciation by straight-line method (b)Prepare journal entries to record depreciation (c)Prepare extracts of statement of profit or loss and other comprehensive income and statement of financial position. Answers (a) Depreciation in year 1 = ($5,000 - $1,00014 = $1,000 Depreciation in year 2 = ($5,000 - $1,00014 = $1,000 (b) Journal Entries Debit Credit 1,000 Year 1 Dr. Depreciation - Motor vehicles Cr. Accumulated depreciation - Motor vehicles Being depreciation provided for a lorry in Year 1. 1,000 Year 2 1,000 Dr. Depreciation - Motor vehicles Cr. Accumulated depreciation - Motor vehicles Being depreciation provided for a lorry in Year 2. 1,000 Lecture 4 Statement of Profit or Loss and Other Comprehensive Income (extract) for Year 1 Expenses Depreciation: Motor vehicles 1,000 Statement of Financial Position (extract) at year end of Year 1 Non-current assets Motor vehicles Cost 5,000 Accumulated depreciation 1,000 Net book value 4,000 Statement of Profit or Loss and Other Comprehensive Income (extract) for Year 2 Expenses Depreciation: Motor vehicles 1,000 Statement of Financial Position (extract) at year end of Year 2 Non-current assets Motor vehicles Cost 5,000 Accumulated depreciation denreciation 2,000 Net book value 3,000 Lecture 4 Exercises 12.12 You bought a lorry for $5,000. Its useful life is estimated at four years. The residual value is expected to be $1,000 after the four years. Required: Work for Year 1 and Year 2 only: (a)Calculate depreciation by straight-line method (b)Prepare journal entries to record depreciation (c)Prepare extracts of statement of profit or loss and other comprehensive income and statement of financial position. Answers (a) Depreciation in year 1 = ($5,000 - $1,00014 = $1,000 Depreciation in year 2 = ($5,000 - $1,00014 = $1,000 (b) Journal Entries Debit Credit 1,000 Year 1 Dr. Depreciation - Motor vehicles Cr. Accumulated depreciation - Motor vehicles Being depreciation provided for a lorry in Year 1. 1,000 Year 2 1,000 Dr. Depreciation - Motor vehicles Cr. Accumulated depreciation - Motor vehicles Being depreciation provided for a lorry in Year 2. 1,000 Lecture 4 Statement of Profit or Loss and Other Comprehensive Income (extract) for Year 1 Expenses Depreciation: Motor vehicles 1,000 Statement of Financial Position (extract) at year end of Year 1 Non-current assets Motor vehicles Cost 5,000 Accumulated depreciation 1,000 Net book value 4,000 Statement of Profit or Loss and Other Comprehensive Income (extract) for Year 2 Expenses Depreciation: Motor vehicles 1,000 Statement of Financial Position (extract) at year end of Year 2 Non-current assets Motor vehicles Cost 5,000 Accumulated depreciation denreciation 2,000 Net book value 3,000
