Sejati Bhd buys a new machinery for RM10,000 on 1 January 2018. The machinery is estimated to be used for 5 years. After exactly 3 years, however, the machinery is suddenly sold for RM5,000. Sejati Bhd always provide a full years depreciation in the year when assets are purchased and no depreciation in the year when assets are disposed.

Required:

Prepare the machinery account, accumulated depreciation for machinery accounts and machinery disposal accounts for years 2018, 2019 and 2020:

a. Using the straight-line depreciation method (assume 20% p.a.). (7 marks)

b. Using the reducing balance depreciation method (assume 40% p.a.). (8 marks)