Question 3

Atonak Company limited is embarking on expansion program as a move to achieve its corporate objecitve in the next 10 years.

As a result, Atonak on 1st of September 2000, bought machinery costing GHc 100.000. The machine is expected to have economic useful life of 10 years. On 1st of May 2003, Atonak bought another machine for GHc 50,000 which is also expected to have 5 years economic useful. All the machine was brought to use in the company immediately after purchase.

It is the policy of Atonak to depreciate machines on straight line basis and is based on the usage of the machine.

Required:

1. Calculate the depreciation for the machines for five year

2. Show the Income statement and Statement of financial position extracts show how depreciation will be recorded in the financial statements for the five years.