QUESTION 2

DISPOSAL OF FIXED ASSETS

(20)

REQUIRED

Answer the following questions from the information given below. All workings must be shown.

2.1

Calculate the depreciation for the current financial year on the vehicle that was sold.

(2)

2.2

Prepare the Fixed Asset Realisation account in the general ledger to reflect the disposal of the vehicle on 31 August 2016.

(4)

2.3

Calculate the depreciation for the current financial year on the new vehicle acquired.

(2)

2.4

Calculate the total cost price of the vehicles on 28 February 2017.

(2)

2.5

Prepare the Accumulated Depreciation on Vehicles account in the general ledger to reflect all the entries up to the end of the financial year.

(5)

2.6

Prepare the following note to the financial statements (amount column for Vehicles only) as at 28 February 2017:

Property, plant and equipment

(5)

INFORMATION

Steers Enterprises owns a fleet of motor vehicles. The following balances appeared in the general ledger on 01 March 2016, the beginning of the financial year:

Vehicles at cost

Accumulated depreciation on vehicles

R1 000 000

R400 000

Additional information

On 31 August 2016, a vehicle that cost R200 000 was sold for R32 000 cash. The accumulated depreciation on this vehicle was R165 000 on 01 March 2016.

On 01 December 2016 a new vehicle was purchased for R250 000 cash.

Deprecation is provided for on vehicles at 20% per annum on the diminishing balance.