Question 2

The following information relating to the non-current assets of sole trader B. Martin as at 1 January 2021 is available:

	N$
Premises at cost 1 January 2021	540,000
Accumulated depreciation premises 1 January 2021	113,400
Delivery vans: Delivery van A at cost (purchased 1 July 2016)	31,500
Delivery van B at cost (purchased 1 April 2018)	26,500
Delivery van C at cost (purchased 1 April 2019)	40,000

During the year to 31 December 2021 the following occurred:

Premises

Due to increased demand, B. Martin built an extension to his premises. The following costs were incurred:

1. Site preparation N$ 20,500
2. Building materials N$79,000
3. Contract labour (used in the construction of the build) N$61,000
4. Architect and legal fees incurred N$ 17,000
5. General repairs to the existing building N$ 6,460.

(These repairs did not enhance the earnings capacity of the building).

6. The extension was finished and brought into use on 1 July 2021. The new extension is to be depreciated in line with the existing building at 2% per annum straight line basis.

Delivery Vans Delivery

Delivery Van C

On 1 February 2021, delivery van C was crashed and completely written off. The van was sold to a scrap yard for N$ 900. The insurance company paid out N$ 20,500 in compensation.

Delivery Van B

On 1 September 2021, delivery van B was traded in against a new delivery van, delivery van D. A trade in allowance of N$12,000 was achieved on delivery van B and used in part payment of delivery van D. The total cost of delivery van D was N435,000 and the balance due was paid immediately by cheque.

Delivery vans are depreciated by 20% per annum on a straight line basis.

The depreciation policy of B. Martin is to charge depreciation from the month of purchase to month of sale.

You are required to prepare the following T(ledger) accounts for the year ended 31 December 2021:

A. Premises: cost account.AND premises: accumulated depreciation account
B. Delivery van: cost account AND Delivery van: accumulated depreciation account
C. Disposal account delivery van C AND Disposal account delivery van B.