The following statements was extracted from the books of ShafNita Sdn. Bhd. at 31 December 2019 and 2020. ShafNita Sdn. Bhd. Statement of Financial Position as at 31 December 2019 2020 RM RM RM RM Non Current Assets Building 100,000 100,000 Fixtures less accumulated depreciation 3,600 4,000 Van less accumulated depreciation 7,840 14,800 111,440 118,800 Current Asset Inventory 11,200 24,800 Trade account receivable 12,800 16,400 Bank 1,800 - Cash 440 400 26,240 41,600 Total assets 137,680 160,400 Finance by: Capital account: Balance at 1 January 74,080 105,080 Add: Net profit for the year 70,400 42,320 Cash introduced - 20,000 144,480 167,400 Less: Drawings (39,400) (43,200) 105,080 124,200 Non Current Liabilities Loan (repayable in 10 years time) 20,000 30,000 Current Liablities Account Payable 12,600 6,012 Bank overdraft - 188 Retained earnings 32,600 36,200 Total liabilities and equity 137,680 160,400 Additional information at 31 December 2020: Fixtures bought in 2020 cost RM800. Van bought in 2020 cost RM11,000. Required: Prepare statement of cash flow for ShafNita Sdn. Bhd. for the year ended 31 December 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.
The following statements was extracted from the books of ShafNita Sdn. Bhd. at 31 December
2019 and 2020.
ShafNita Sdn. Bhd.
2019 2020
RM RM RM RM
Non Current Assets
Building 100,000 100,000
Fixtures less accumulated depreciation 3,600 4,000
Van less accumulated depreciation 7,840 14,800
111,440 118,800
Current Asset
Inventory 11,200 24,800
Trade
Bank 1,800 -
Cash 440 400
26,240 41,600
Total assets 137,680 160,400
Finance by:
Capital account:
Balance at 1 January 74,080 105,080
Add: Net profit for the year 70,400 42,320
Cash introduced - 20,000
144,480 167,400
Less: Drawings (39,400) (43,200)
105,080 124,200
Non Current Liabilities
Loan (repayable in 10 years time) 20,000 30,000
Current Liablities
Account Payable 12,600 6,012
Bank overdraft - 188
Total liabilities and equity 137,680 160,400
Additional information at 31 December 2020:
Fixtures bought in 2020 cost RM800.
Van bought in 2020 cost RM11,000.
Required:
Prepare statement of
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