During the year ended 30 June 2020, machinery worth RM20,000 and motor vehicles worth RM60,000 were purchased by cheques. The machinery was depreciated at 10% per annuum using the straight line method and the motor vehicles at 20% per year using the reducing balance method. Required: Show the following for the year 2020: a) Machinery account b) Motor vehicles account c) Accumulated depreciation accounts for machinery and motor vehicles respectively d) Statement of Financial Position (extract) as at 30 June 2020
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
During the year ended 30 June 2020, machinery worth RM20,000 and motor vehicles worth RM60,000 were purchased by cheques. The machinery was
Required:
Show the following for the year 2020:
a) Machinery account
b) Motor vehicles account
c)
d)
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