Depreciation

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:30AM in AAT student discussion
Does anyone have an easy formula for remembering part exchanging a fixed asset and depreciation debits and credits ?

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Depreciation

    Hi Goggy,<BR><BR>I try me best putting my thought into the writing ,hopfully it can make sense for you:<BR><BR>Firstly you should have a whole picture about this matter.it means you should have rough ideas how many "T"accounts involve in entries, put all them in the paper ,as you know there are fixed assets (machine or van etc), disposals a/c,bank a/c or maybe sundry creditor a/c ,depreciaton exp a/c ,provision deprecaion a/c and vat a/c ,i know it seems a lot to remeber,but once you put them all in the paper,use the double-entry theory , shoule do the job!!<BR><BR>Now deal with the question step by step<BR>step 1 <BR>- Dr fixed asset a/c with the amount of the part-exchange allowance<BR>- Cr disposal a/c with the same amount<BR>step 2<BR>- Dr the reminder of the cost of fixed asset<BR> Dr VAT a/c<BR>- Cr the bank (pay by cheque) or<BR> Cr the sundry creditor<BR>In this step you should bury in mind the vat factor,<BR>step 3<BR>-Dr Depreciation Exp a/c on the new fiexed asset amount<BR>-Cr Provision Dep a/c<BR>this step will depends on firm's policy of fixed asset depreciation<BR>chaoliss
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Depreciation

    Thanks - will be doing some practising !!!

Categories

Privacy Policy