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Need help for this accounting question. (a) Martina Limited bought a piece of equipment costing $800,000 on 1 January 2023. The estimated useful life of
Need help for this accounting question.
(a) Martina Limited bought a piece of equipment costing $800,000 on 1 January 2023. The estimated useful life of the equipment is five years. The scrap value at the end of the useful life is $40,000. Required: (i) Calculate the depreciation expense for 2023 using the straight-line method. [4 marks] (ii) Calculate the depreciation expense for the first two years using the reducing balance method if the depreciation rate is 18% per annum. [6 marks] (b) From the list given below, you are required to classify 'Capital Expenditure' and 'Revenue Expenditure. (i) Photocopy papers bought for administrative purposes (ii) Purchase of Machinery for production in factory (iii) Cost of renovation for office and factory premises (iv) Cost of installation expenses relating to machinery (v) Salaries and wages paid to factory operatives [5 marks] (c) Martina operates a coffee shop, Tina Caf, with a financial year ending 30 June. On 1 July 2023, Martina purchased a new coffee machine. The machine had a recommended retail price of $250,000. The caf appliances and furnishings cost $400,000. The delivery of the coffee machine cost $1,500, installation was $11,900 and a new cash registered was purchased at $6,000. All payments were paid in cash. Required: Calculate the cost to be capitalised. [6 marks] (d) Martina Ltd bought an equipment for $165,000 but the accounts clerk recorded the transaction into repairs to machine account. The corresponding entry was recorded correctly. Required: Explain the effects of the error on the elements of financial statements. [4 marks]Step by Step Solution
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