Question 1(Marks:30)

The following balances appeared in the books of Change Traders on 30 September 2019.

Land and Buildings R1 500 000

Vehicles R600 000

Accumulated depreciation: vehicles R220 000

Furniture R180 000

Accumulated depreciation: furniture R48 780

Additional information:

• On 31 December 2019 one of the vehicles were sold for cash of R170 000. This vehicle was bought at a cost of R250 000 on 1 October 2017.
• On 1 April 2020 Change Traders bought new furniture to the value of R15 000 from Office Traders.
• A new building was bought on 30 June 2020 for R500 000.

No other acquisitions or disposals took place during the 2020 financial year.

Vehicles are depreciated at a rate of 20% per annum on a straightline basis and furniture at 10% per annum according to the diminishing balance method. Vehicles and furniture have no residual values. Land and Buildings are not depreciated.

Ignore VAT.

Required: Round to two decimal places.

Q.1.1 Calculate the total profit or loss to be recognised on disposal of the vehicle. Clearly state whether a profit or loss was made. (9)

Q.1.2 Prepare the property, plant and equipment note to the financial statements for the year ended 30 September 2020. The total column is not required.