Performance Task 1

Scenario

You are a bookkeeper at a medium-sized manufacturing company called XYZ Manufacturing Pty Ltd. Recently, you prepared an asset register and depreciation schedule for the business.

1.1

Instructions

STEP 1

Access the Assets Register you completed in Project A Part 2. Then, calculate the depreciation expense for the BBQ Stamping Machine and the BBQ Steam Welder for Year 1, using the prime cost (straight line) method of depreciation. The effective life of both assets is 10 years.

Hint

Calculate the depreciation expense for each asset using the following formula: Depreciation expense = (Purchase Price - Salvage Value) / Effective Life.

If the asset is held for only one year the accumulated depreciation will be the same as the depreciation expense for the asset for that year.

Show full workings in the table below.

Year	Description of asset	Asset ID	Purchase date	Purchase price	Depreciation amount	Accumulated depreciation	Closing balance
Totals

Attach filesSave

1.2

STEP 2

The client wants to know which depreciation method (straight line or diminishing value) will result in a lower depreciation expense for the first year. Please provide a concise response.

(Approximate word count: 30 - 45 words).

Evidence required

• Completed table, including the full workings
• Answer to STEP 2 question