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Mr Chibanda owns a Construction company based in Kasama. His Assets Register had the following details for his assets. Date of Acquisition Asset Details Cost

Mr Chibanda owns a Construction company based in Kasama. His Assets Register had the following details for his assets.


Date of Acquisition

Asset Details

Cost (K)

Dep. Rate (%)

Accumulated Dep

Dep. Charge







31-Mar-18

Saloon Car

280,000.00

20.00

168,000.00

56,000.00

31-Mar-18

Soil Tester

160,000.00

25.00

120,000.00

40,000.00

01-Apr-18

Truck 8 Ton

780,000.00

25.00

390,000.00

195,000.00

01-Apr-18

Utility Van

450,000.00

25.00

225,000.00

112,500.00

28-Apr-18

Office Building

1,200,000.00

2.00

48,000.00

24,000.00

31-Mar-19

Industrial building

3,400,000.00

5.00

340,000.00

170,000.00

31-Mar-19

Tipper Truck

890,000.00

25.00

445,000.00

222,500.00

31-Mar-19

Compactor

1,700,000.00

25.00

850,000.00

425,000.00









8,860,000.00


2,586,000.00

1,245,000.00



NOTES

  1. The Saloon Car purchased on 31 March 2018 for K280,000 was sold on 31 March 2020 for K160,000
  2. The Utility Van bought on 1 April 2018 was involved in an accident and it was beyond economic recovery. Since it was comprehensively insured, the Insurer paid K324,000 after deducting 10% excess.



Required:

  1. Explain the terms Balancing Allowance and Balancing Charge
  2. In both instances, calculate if there was any Balancing Allowance or Balancing Charge

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