tenzyna
Answered

Discover the answers you need at Westonci.ca, a dynamic Q&A platform where knowledge is shared freely by a community of experts. Our platform provides a seamless experience for finding precise answers from a network of experienced professionals. Explore comprehensive solutions to your questions from a wide range of professionals on our user-friendly platform.

On 1st January 2014, a company purchased Machinery for $200,000. Depreciation was charged under the straight-line method 10% p.a. At the end of 2016, the company has decided to change the depreciation method straight line to diminishing balance 15% p.a. effective from the very beginning. The accounts are closed on 31 December each year.
Required: Machinery account from 2014 to 2016​

Sagot :

Parrain

The machinery account from 2014 to 2016 based on the straight-line and diminishing balance methods will look like:

                                              Machinery a/c

1/1/14   Bank                        $200,000 12/31/14 Depreciation       $20,000

                                                                            Balance c/d         $180,000

                                           $200,000                                            $200,000

1/1/15   Balance b/d           $180,000 12/31/15 Depreciation        $20,000

                                                                            Balance c/d         $160,000

                                           $180,000                                              $180,000

1/1/16   Balance b/d      $160,000  12/31/16  Depreciation             $20,000

                                                                       Income Statement -  $17,175

                                                                       Depreciation

                                                                       adjustment

                                                                       Balance c/d             $122,825

                                           $160,000                                            $160,000

What is the machinery account balance for the three years?

The depreciation for 2014 and 2015 is:

= 200,000 x 10%

= $20,000

In 2016, the depreciation changes to diminishing balance. The income adjustment will be:

= Balance in 2016 using straight-line - Balance using diminishing balance

= 140,000 - 122,825

= $17,175

Find out more on accounting for depreciation at https://brainly.com/question/25785586.

#SPJ1

Thank you for visiting our platform. We hope you found the answers you were looking for. Come back anytime you need more information. We hope you found this helpful. Feel free to come back anytime for more accurate answers and updated information. Westonci.ca is here to provide the answers you seek. Return often for more expert solutions.