Problem: NON CURRENT ASSETS
1. Screen Factory has a 31 March balance date. On 1 September 2015, Screen Factory bought a new machine. What four pieces of information does the accountant need to know before she can work out the annual depreciation charge relating to the machine?
2. Nonsuch Estate depreciates all its machinery. Does that mean Nonsuch Estate will preserve its productive capacity?
3. On 1 April 2013 Truculent Truckers traded in their old truck for a new one. They were given a trade in allowance of $11,500 for the old truck and paid the $75,000 difference in cash. As the new truck would be used between Auckland and Wellington the area behind the seats of the truck was modified to provide sleeping space for the driver at a cost of $3,500. The truck was filled with diesel which cost $200.
Truculent Truckers intention was to keep the new truck for four years, after which they estimate that it will fetch a trade in value of $20,000. Truculent Traders use the reducing balance method at a rate of 33% per year.
(i) What was the cost of the new truck which was entered in the Vehicles account?
(ii) Calculate the depreciation charge for the year ended 31 March 2016 and the net book value as at that date. (Round to the nearest dollar)
(iii) Show how the Truck would appear in the Balance sheet of Truculent Truckers as at 31 March 2016.
4. On 1 January 2016 a machine which had an original cost of $64,000 and accumulated depreciation of $52,000 was sold for $14,500. What were the items (accounts) affected by this transaction and by how much? Use + and - to indicate if an item is increased or decreased.