Q.4

ABC Public Limited purchased plant and equipment for $ 200,000. The plant and equipment has an estimated life of 4 years and residual or salvage value of $40,000 by the end of its life.

Instructions

1. Prepare schedule of depreciation using sum of years digit method. (10)
2. Compute gain or loss on disposal if plant and equipment is sold for $ 150,000 by the end of third year. (5)
3. Prepare journal entry in disposal of plant and equipment. (5)