Home For AAT student members AQ 2013 AAT Level 3 (Level 6 in Scotland)

fixed asset and depreciation hellllllp

jkcjkc Well-KnownRegistered Posts: 166
stumped

1st june 2007 a company owns machines costing 125 000 which had been depreciated
by 900000
on 1st Aug 2007 sold machines for 55,000 depreciated by 500000 for 4000
and bought a new machines cost 70 000
depreciation is 35% using reducing line method

hellp thanks

Comments

  • EsmeEsme Experienced Mentor Registered Posts: 711
    jkc wrote: »
    stumped

    1st june 2007 a company owns machines costing 125 000 which had been depreciated
    by 900000
    on 1st Aug 2007 sold machines for 55,000 depreciated by 500000 for 4000
    and bought a new machines cost 70 000
    depreciation is 35% using reducing line method

    hellp thanks

    What are you trying to ask? Do you want to know what 35% depreciation is on 70000 over year?
  • jkcjkc Well-Known Registered Posts: 166
    hi thanks
    on depreciation
    what do you do when an amount has already depreciated.
    and the double entry for this
  • Gem7321Gem7321 Experienced Mentor DevonMAAT, AAT Licensed Accountant Posts: 1,438
    Are these figures right? How can machines that cost £125,000 be depreciated by £900,000?/£55,000 and depreciated by £500,000?
  • jkcjkc Well-Known Registered Posts: 166
    sorry head mash such a numpty today knock a naught off
    shd be 90, 000 and 50,000
  • Gem7321Gem7321 Experienced Mentor DevonMAAT, AAT Licensed Accountant Posts: 1,438
    You say the depreciation method is reducing line, do you mean reducing balance or straight line?

    And you say depreciated by 50,000 for 4,000, what is the 4000?!
  • jkcjkc Well-Known Registered Posts: 166
    hi Gem
    thanks for your help
    4000 is what the machine costing 55000 had been sold for
    but it had already been depreciated by 50,000
    the company uses reducing balance method.
    I guess im asking about double entry more than any thing.
  • EsmeEsme Experienced Mentor Registered Posts: 711
    jkc wrote: »
    hi Gem
    thanks for your help
    4000 is what the machine costing 55000 had been sold for
    but it had already been depreciated by 50,000
    the company uses reducing balance method.
    I guess im asking about double entry more than any thing.

    You would need to set up a disposals account, debit the account with the cost of the original machine (55,000) and credit machine at cost account. Credit disposals account with the 4,000 and debit the bank and credit the disposals with 50,000 for depreciation and debit depreciation account. You will then have 1,000 outstanding which will be debited (I think) to profit and loss account as a loss on disposal.
  • jkcjkc Well-Known Registered Posts: 166
    thanks esme
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