Alesya came to Malaysia from Australia six years ago to study at university for a degree in Computer science.. After graduating he worked as an information technology manager for a computer company and saved his wages to build up the capital needed to invest in his own business. Zumo's friend, Charles Wu had recently put his computing consultancy business up for sale, which was set up ten years ago, and seemed quite successful. The premises were located on a busy street in the town center of Kuching, and operated a 'collect and return' service, enabling computers to be serviced without the customer having to leave their home. Upon purchase of the business from Charles, Zumo acquired several fixed assets for use in the business. These included a personal computer, a laptop computer and various machines facilitating welding and electronic engineering to be carried out on computer circuit boards, rebuilding computers and other assembly activities. The main fixed assets included: 1 personal computer valued at RM 8000. 1 laptop computer valued at RM 5000. welding machine valued at RM 2000 and; engineering/assembly machinery valued at RM10000 The two computers have a useful economic life of 4 years each, over which they would be depreciated. The remaining fixed assets have a useful economic life of 5 years each. The deprecation is calculated using the straight-line method in all cases. Zumo is convinced that the purchase of the company will be a worthwhile investment, although he does not see the need to depreciate the fixed assets, due to the specialised nature of the business. 1. Calculate for each type of asset, the annual depreciation charges which would be charged to the profit and loss account. 2. Calculate for each type of asset, the cumulative depreciation charges which would apply in the final year of the asset's useful economic life, which would be shown in the balance sheet.
Alesya came to Malaysia from Australia six years ago to study at university for a degree in Computer science.. After graduating he worked as an information technology manager for a computer company and saved his wages to build up the capital needed to invest in his own business. Zumo's friend, Charles Wu had recently put his computing consultancy business up for sale, which was set up ten years ago, and seemed quite successful. The premises were located on a busy street in the town center of Kuching, and operated a 'collect and return' service, enabling computers to be serviced without the customer having to leave their home. Upon purchase of the business from Charles, Zumo acquired several fixed assets for use in the business. These included a personal computer, a laptop computer and various machines facilitating welding and electronic engineering to be carried out on computer circuit boards, rebuilding computers and other assembly activities. The main fixed assets included: 1 personal computer valued at RM 8000. 1 laptop computer valued at RM 5000. welding machine valued at RM 2000 and; engineering/assembly machinery valued at RM10000 The two computers have a useful economic life of 4 years each, over which they would be depreciated. The remaining fixed assets have a useful economic life of 5 years each. The deprecation is calculated using the straight-line method in all cases. Zumo is convinced that the purchase of the company will be a worthwhile investment, although he does not see the need to depreciate the fixed assets, due to the specialised nature of the business. 1. Calculate for each type of asset, the annual depreciation charges which would be charged to the profit and loss account. 2. Calculate for each type of asset, the cumulative depreciation charges which would apply in the final year of the asset's useful economic life, which would be shown in the balance sheet.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Alesya came to Malaysia from Australia six years ago to study at university for a degree in
Computer science.. After graduating he worked as an information technology manager for a
computer company and saved his wages to build up the capital needed to invest in his own
business.
Zumo's friend, Charles Wu had recently put his computing consultancy business up for sale,
which was set up ten years ago, and seemed quite successful. The premises were located on a
busy street in the town center of Kuching, and operated a 'collect and return' service, enabling
computers to be serviced without the customer having to leave their home.
Upon purchase of the business from Charles, Zumo acquired several fixed assets for use in the
business. These included a personal computer, a laptop computer and various machines
facilitating welding and electronic engineering to be carried out on computer circuit boards,
rebuilding computers and other assembly activities.
The main fixed assets included:
• 1 personal computer valued at RM 8000.
• 1 laptop computer valued at RM 5000.
• welding machine valued at RM 2000 and;
• engineering/assembly machinery valued at RM10000
The two computers have a useful economic life of 4 years each, over which they would be
depreciated. The remaining fixed assets have a useful economic life of 5 years each. The
deprecation is calculated using the straight-line method in all cases.
Zumo is convinced that the purchase of the company will be a worthwhile investment, although he
does not see the need to depreciate the fixed assets, due to the specialised nature of the
business.
1. Calculate for each type of asset, the annual depreciation charges which would be charged to
the profit and loss account.
2. Calculate for each type of asset, the cumulative depreciation charges which would apply in the
final year of the asset's useful economic life, which would be shown in the balance sheet.
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