Anyone know how to work this out?

Abbie28

During the year some equipment was part exchanged.

The original equipment was brought for £1200.
Two years depreciation has been applied.
Depreciation is on reducing basis at 35%.
A part exchange allowance of £300 was given.
£1000 was paid from the bank for the new equipment.

Calculate the accumilated depreciatiopn on the old equipment that was part exchange during the year?

How do i work this out?

Abbie28

i dont know if the answer i 693 or 870?

sunshine2010

i got 693

You take 35% of £1200 - which is £420
Then you take the £420 away from the £1200 which leaves - £780
Then 35% of 780 which is £273

Add the first year depreciation of £420 and the second years of £273 and you get - £693

Please correct me if i am wrong anyone.

Thanks

Monsoon

Abbie28 wrote: »

During the year some equipment was part exchanged.

The original equipment was brought for £1200.
Two years depreciation has been applied.
Depreciation is on reducing basis at 35%.
A part exchange allowance of £300 was given.
£1000 was paid from the bank for the new equipment.

Calculate the accumilated depreciatiopn on the old equipment that was part exchange during the year?

How do i work this out?

The px is a red herring and doesn't affect the depreciation. You need this info to do the disposals account (which I expect is the next step in this question).

Cost 1200

Depn year 1 = 1200 * 35% = 420

Depn year 2 1200-420= 780.
780 *35% = 273

total depn for 2 years = 420+273 = 693

jenny3549

The question has asked for the accumulated depreciation so:

Original Cost of Equipment 1200
Yr 1 Depreciation (35%) (420)
NBV at end Yr 1 780
Yr 2 Depreciation (35% of 780) (273)
NBV at end Yr 2 507

Therefore the accumulated depreciation is the charge in Yr 1 (420) plus the charge in Yr 2 (273) making a total of 693.

Hope that makes sense!


Edit: Whoops - looks like we all answered at once!

Abbie28

Thank you!!! really helpfull!

Abbie28

Do you know where i could get tips on Appropriation Accounts i suck at them big time...

I reallyappreciated that thank for your time im so happy now i finally understand it.