Section 3: Required: Question 1 (a) Calculate the cost of the machine. (b) Compute the annual depreciation for the years ended 31 Dec 2011, 2012, 2013, 2014 and 2015 using the following depreciation basis: Wayne operates a candy factory in Seremban. The machines in his factory are purchased overseas. On 1 Jan 2011, he purchased a machine from Japan costing RM120,000. The machine was delivered to Malaysia on freight. The transportation cost of RM3,000 and freight insurance of RM1,200 was bome by Wayne. When the machine landed in Malaysia, Wayne paid custom duty of RM3,000. (i) (ii) straight line reducing balance basis at the rate of 42% per annum (c) With your answer in (b) (ii) above, prepare for the years ended 31 Dec 2013, 2014 and 2015: Wayne hired an engineer to install the machine within the factory. The engineer told Wayne that in the event Wayne wishes to dismantle the machine in the future, it would cost him RM700. After the installation was completed, the engineer billed him at RM1000. (i) (ii) (ii) (iv) (v) Machinery account Depreciation account Accumulated depreciation account Statement of Profit or Loss (extract) Statement of Financial Position (extract) Wayne plans to use the machine for 6 years. Every year, the machine would be maintained at a cost of RM350. At the end of year 6, the machine will be dismantled and sold off as scrap for RM5,000. (d) Show the journal entries to record the depreciation charge for the year ended 31 Dec 2011 and 2012 using the reducing balance method. For every of his assets, Wayne adopts the policy to make full year depreciation in the year of purchase and no depreciation in the year of disposal.
Section 3: Required: Question 1 (a) Calculate the cost of the machine. (b) Compute the annual depreciation for the years ended 31 Dec 2011, 2012, 2013, 2014 and 2015 using the following depreciation basis: Wayne operates a candy factory in Seremban. The machines in his factory are purchased overseas. On 1 Jan 2011, he purchased a machine from Japan costing RM120,000. The machine was delivered to Malaysia on freight. The transportation cost of RM3,000 and freight insurance of RM1,200 was bome by Wayne. When the machine landed in Malaysia, Wayne paid custom duty of RM3,000. (i) (ii) straight line reducing balance basis at the rate of 42% per annum (c) With your answer in (b) (ii) above, prepare for the years ended 31 Dec 2013, 2014 and 2015: Wayne hired an engineer to install the machine within the factory. The engineer told Wayne that in the event Wayne wishes to dismantle the machine in the future, it would cost him RM700. After the installation was completed, the engineer billed him at RM1000. (i) (ii) (ii) (iv) (v) Machinery account Depreciation account Accumulated depreciation account Statement of Profit or Loss (extract) Statement of Financial Position (extract) Wayne plans to use the machine for 6 years. Every year, the machine would be maintained at a cost of RM350. At the end of year 6, the machine will be dismantled and sold off as scrap for RM5,000. (d) Show the journal entries to record the depreciation charge for the year ended 31 Dec 2011 and 2012 using the reducing balance method. For every of his assets, Wayne adopts the policy to make full year depreciation in the year of purchase and no depreciation in the year of disposal.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:ABFA1173 Principles of Accounting
Section 3:
Required:
Question 1
(a) Calculate the cost of the machine.
Wayne operates a candy factory in Seremban. The machines in his factory
are purchased overseas. On 1 Jan 2011, he purchased a machine from Japan
costing RM120,000. The machine was delivered to Malaysia on freight. The
transportation cost of RM3,000 and freight insurance of RM1,200 was bome
by Wayne. When the machine landed in Malaysia, Wayne paid custom duty
of RM3,000.
(b) Compute the annual depreciation for the years ended 31 Dec 2011,
2012, 2013, 2014 and 2015 using the following depreciation basis:
(i)
(ii)
straight line
reducing balance basis at the rate of 42% per annum
(c) With your answer in (b) (ii) above, prepare for the years ended 31 Dec
2013, 2014 and 2015:
Wayne hired an engineer to install the machine within the factory. The
engineer told Wayne that in the event Wayne wishes to dismantle the
machine in the future, it would cost him RM700. After the installation was
completed, the engineer billed him at RM1000.
(i)
(ii)
(ii)
(iv)
(v)
Machinery account
Depreciation account
Accumulated depreciation account
Statement of Profit or Loss (extract)
Statement of Financial Position (extract)
Wayne plans to use the machine for 6 years. Every year, the machine would
be maintained at a cost of RM350. At the end of year 6, the machine will be
dismantled and sold off as scrap for RM5,000.
(d) Show the journal entries to record the depreciation charge for the year
ended 31 Dec 2011 and 2012 using the reducing balance method.
For every of his assets, Wayne adopts the policy to make full year
depreciation in the year of purchase and no depreciation in the year of
disposal.
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