ADMAS UNIVERSITY
DEPARTMENT OF ACCOUNTING AND FINANCE
Course Title: Financial Accounting
Individual Assignment-2
Submitted by:
Student Name
Banchayehu Alemayehu
ID No.
1365/18
Section
A3
Submitted To:
Mr. Ermias B.
June 26, 2020
Addis Abeba, Ethiopia
1. Cost of land = the sum of all costs associated with the purchase of land all the
expenditure necessary to prepare the land for its intended use Cost of land
&cost of building
[Land +purchase] + [cost of tear land]
[Building]+ [legal feas]
[Artichresfe]+ [Title insurance cost]
[Liability insurance cost]+Excavation cost]
[Payment for contractor]+ [payment cost]
[Interest cost]- [Revenue]
= 600,000+60,000+3,480+31,200
+2,400+ 2,600 +10,440+ 2200,000
(+6,400+170,000)-5400
=3,086,520 -5400
Birr 3,081,120
2.
Given
Initial cost =2,160,000 Birr
Useful life =5 years
Solvage value =90,000 Birr
A. Deprecation expense using sum of the year digit method and double decline
balance method for year 2016 &2017
@ using sum of the year digit method
Depreciable cost =original cost –solvage value
=2,160,000 -90,000
= 2,070,000
1
Adding up the digit in the five years
Sum of the years digit =1+2+3+4+5
=15
Depreciation expense =5/15 *Deprecible cost
(2016) [1st year]
=5/ *2,070,000
=690,000 Birr
Depreciation Expense =4/15 * Depreciable cost
[2017] [2nd year]
= 4/15* 2,070,000 B
= 552,000Birr
@ using double declining balance method
Total depreciable cost =orginal cost –solvage value
=2,160,000 -90,000
= 2,070,000
Annual depecition rate =100%
Use full life
=100/5 %=20%
B/c we are using the double dealing balance method we multiply the annual
depreciation rate by 2, hence 20X2=40% double deprecation rate
Depreciation expense =original cost or Beginning book value *double of the annual
deprecation rate [2016] 1st year
2,160,000*40%
864,000 Birr
2
2017 Beginning book expense =Beginning Book value for 2017
*duble of annual dep rate
[2017] 2nd year
=1,296,000 *40%
=518,400 Birr
B. solvage value = 120,000 useful life =4years
Annual dep =original cost solvage value
Useful life
Ex
3.
Cash……………………………………………………………. .216, 00
Less solve value ………………………………………………...24,000
Depreciable July1, 2014…………………………………. …… 192,000
Less Deprecation to date……………………………….. ……….80, 000
Depreciable Jan 1, 2017………………………………… …… 112,000
Over hall……………………………………………………… …20,000
Depreciable base Jan 1, 2017…………………………………….132, 000
[Adujest ]
Deprecation to date = [192,000/6]*21/2
= 80,000
Entries for Jan 1, 2017 & Dec 31, 2017
Jan 1,2017 Accum Dec ……………………………….20,000
Cash ………………………………….20, 000
Dec 31, 2017 Dep expanse……………………………….24,000
Accum Dec…………………………………………..24,000
4.
3
co Almaz
Tony Almaz
Equipment [cost]
28,000
28,000
Accumulated dep
19,000
10,000
For value of equip
12,500
15,500
Cash give up……………… 3,000
Co Almaz
Accmulated Depr ………………………………………..19000
Equpiment
Equp
………………………………………….1200
…………………………………………….28,000
Cash ………………………3,000
Tony Almaz
Accumlated……………………………………….10,000
Cash………………………..3,000
Less on disposal of equpm…………………………..25000
Equp…………………..28,000
5.
Edmand co
Apprasal value …………Birr 1775,000
Cost ………………………… Birr 2700,000
Acc dep ……………………Birr 1350,000
Rosen Co
Apparsal value………………… Birr 1695,000
Cost …………………………………Birr 3240,000
Acc dep………………………………1782,000
4
Cash given up Birr 60,000
N.B dep has already been updated
[A] had commercial substance on both co books
[B] Locked commercial
A] fv at equipment cash recevid/paid
Edmod
Rosen
1,695,000
1,779,000
60,000
[60,000]
(1350,000)
(1458000)
Less Bv of equipment
(2,700,000-1350,000)
(3240,000-1782,000)
Gan loss on exchange ………………………………..405000
Edmond co entery
Equpment ……………………………..1695,000
Cash…………………………………………..60,000
Acc dep …………………………………………………………1350,000
Equp…………………………………………………………………2700,000
Gan on exch……………………………………………………409000
Rosen co
Equp…………………………………………………………1,775,000
Acc dep……………………………………………………….1782,000
Equp…………………………………………………………………3240,000
5
Cash…………………………………………………60,000
Gan on exchange…………………………..257,000
[A]cash recived
60,000
40900=13846,15
60,000+1695,000
De gain =405,000-133846
=391,154
6