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27.3AA company maintains its fixed assets at cost. Depreciation provision accounts, one for
each type of asset, are in use. Machinery is to be depreciated at the rate of 15% per annum, and
fixtures at the rate of 5% per annum, using the reducing balance method. Depreciation is to be
calculated on assets in existence at the end of each year, giving a full year’s depreciation even
though the asset was bought part of the way through the year. The following transactions in
assets have taken place:
20X51 JanuaryBought machinery £2,800, fixtures £290
1 JulyBought fixtures £620
20X61 OctoberBought machinery £3,500
1 DecemberBought fixtures £130
The financial year end of the business is 31 December.
You are to show:
(a)The machinery account.
(b)The fixtures account.
(c)The two separate provision for depreciation accounts.
(d)The fixed assets section of the balance sheet at the end of each year, for the years ended
31 December 20X5 and 20X6.

Sagot :

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