tenzyna
Answered

Find the best answers to your questions at Westonci.ca, where experts and enthusiasts provide accurate, reliable information. Experience the ease of finding accurate answers to your questions from a knowledgeable community of professionals. Connect with a community of professionals ready to help you find accurate solutions to your questions quickly and efficiently.

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

We hope our answers were useful. Return anytime for more information and answers to any other questions you have. We appreciate your time. Please revisit us for more reliable answers to any questions you may have. Keep exploring Westonci.ca for more insightful answers to your questions. We're here to help.