part exchange

aga1970
aga1970 Registered Posts: 5
in AAT Level 3 (Level 6 in Scotland)
machine was part exchanged on 2004 which had a cost value 16980 but paid 15080 through the bank , original cost of the part ex. asset was 10500 on 2000 and business depreciation for machine 20% on straight line .Calculate depreciation on the new machine and make the relevant entries into ledger accounts : machine cost , machine acc.dep , disposals , bank , depreciation , pleas help .

Comments

  • welshwizard
    welshwizard Registered Posts: 465 Dedicated contributor 🦉
    My blog may help you with this.

    http://aatstudentadvice.blogspot.co.uk/2015/02/hello-world-in-this-blog-i-will-attempt.html

    Follow the steps I give you for part-exchange and you shouldn't wrong.
  • welshwizard
    welshwizard Registered Posts: 465 Dedicated contributor 🦉
    ..and here for depreciation

    http://aatstudentadvice.blogspot.co.uk/2015/02/appreciation-of-depreciation.html
  • welshwizard
    welshwizard Registered Posts: 465 Dedicated contributor 🦉
    edited June 2015
    If, as you said in your post on my blog, this wasn't the sort of help you were after, you would need to publish the full question as dates and depreciation policies are very important. For example, on what date in 2000 was the original asset acquired - 1 January and 31 December are very different dates and, depending on the depreciation policy, could result in very different depreciation figures. Other questions which need answering are: On what date in 2004 was the assest part-exchanged, is depreciation to be charged in the year or acquisition/disposal?
  • aga1970
    aga1970 Registered Posts: 5
    15/11/2004 part exchanged , part exchanged asset on 3/04/2000 , current year ends 31/03/2005 calculate depreciation on the new machine.
  • welshwizard
    welshwizard Registered Posts: 465 Dedicated contributor 🦉
    ....and is deprecation to be charged in the year of acquisition or disposal?

  • welshwizard
    welshwizard Registered Posts: 465 Dedicated contributor 🦉
    Is deprecation charged on an annual or monthly basis?
  • welshwizard
    welshwizard Registered Posts: 465 Dedicated contributor 🦉
    In my experience, this thread highlights why people have problems with these tasks in assessments. RTFQ is my mantra (RTFQ = Read The Full Question). You must take into account ALL information given.
  • welshwizard
    welshwizard Registered Posts: 465 Dedicated contributor 🦉
    edited June 2015
    Given that you've not replied, here's what I can give you based on the information given:
    New machine
    Cost 16,980
    Bank 15,080
    Balance (Part-ex allowance) 1,900


    Depreciation (Assuming a full year's depreciation in first year)
    20% Straight line on cost 3,396 (16,980 x 20%)
    (No residual value given)

    Depreciation if based on full month's of ownership
    20% Straight line on cost 3,396/12 x 4 months (full months owned 15 Nov- 14 Dec, 15 Dec - 14 Jan, 15 Jan - 14 Feb, 15 Feb - 14 Mar)
    = 1,132

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