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Scenario You are employed by Complete Business Services who provide accounting and bookkeeping services to their clients. You are managing one of the clients and
Scenario You are employed by Complete Business Services who provide accounting and bookkeeping services to their clients. You are managing one of the clients and have been provided with the following information and tasks: Organisational Policies and Procedures for Snow Lake Pty Ltd state the following for depreciation: General Journal entries are to be checked and verified before entering the accounting system Balance Day is 30 June All computer equipment must be sold within four years of purchase Depreciation on Motor Vehicles should be calculated using the straight-line method Depreciation on computer equipment should be calculated using the diminishing balance method Record the depreciation and disposal of the non-current assets as per the above organisational Policy and Procedures information and in accordance with legislative requirements Depreciate Motor Vehicles at 20% p.a. Straight line Depreciate Computer Equipment at 30% p. a Reducing balance Complete the following tasks using the information above. The Asset register templates have been provided to you. Refer to Chapter 14 Accounting Principles Book two in Prepare Financial Reports to complete the following Task 1-5 Snow Lake Pty Ltd purchased A motor vehicle was purchased on 31 March 2016 for $42,000 plus GST. It has an expected useful life of 5 years and is being depreciated using the straight-line method to a residual value of $10,000 plus GST. Assuming balance day is 30 June: Task 1 Calculate depreciation for each year (Show your workings) Answer: Annual depreciation charge = (42,000-10,000)/5= $6,400 Depreciation rate =6,400/42,000 =15.24 % Task 2 Prepare a depreciation schedule from 30 June 2016 until 30 June 2018. Answer: Assessment 3 Task 2 Prepare a depreciation schedule from 30 June 2016 until 30 June 2018. Asset Cost: Less: Residual Value Depreciable Amount Motor Vehicle Depreciation Worksheet - Snow Lake Pty Ltd Depreciation method Depreciation p.a: Date 30/6/2016 30/6/2017 30/6/2018 Asset Cost Depreciation Accumulated Depreciation Carrying Amount at the end Task 3 Prepare a journal entry to record depreciation on 30 June 2016. What depreciation method have you used to calculate the motor vehicle depreciation according to organisational policies, procedures? Provide the name of the accounting standards (AASB) that are applicable in calculating this depreciation. Answer: Date Account Debit Credit 3
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