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QUESTION 1
Kokoris Ltd commenced trading on 1 January 2011 and depreciates its fixed assets at the following
rates:
Machinery 15% - straight line method.
A full year’s depreciation is provided on an asset in the year of purchase but none in the year of
disposal.
Kokoris Ltd bought fixed assets as follows:
Year ending
31 December 2011
31 December 2012
31 December 2013
Machinery
€
12,000
10,000
15,000
€6,000 of machinery bought during 2012 was sold in 2013 for €3,000.
REQUIRED
Prepare, for each of the three years ended 31 December 2011, 2012 and 2013, the:
(a) Provision for Depreciation of Machinery Account
(b) Depreciation of Machinery Account
(c) Disposal of machinery Account
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QUESTION 2
Katas Ltd commenced trading on 1 January 2011 and depreciates its fixed assets at the following
rates:
Motor vehicles 25% - straight line method
Katas Ltd bought fixed assets as follows:
Year ending
Motor vehicles
31 December 2011
31 December 2012
31 December 2013
€
40,000
36,000
-
A full year’s depreciation is provided on an asset in the year of purchase but none in the year of disposal
In 2013 Katas sold the vehicle purchased in 2011 for €22.000 by cheque.
REQUIRED
Prepare, for each of the three years ended 31 December 2011, 2012 and 2013, the:
(a) Provision for Depreciation of Motor Vehicles Account
(b) Depreciation of Motor Vehicles Account
(c) Disposal of Motor Vehicles Account
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QUESTION 3
The financial year of Amanda a sole trader, ends on 31 December. The following balances were taken
from the accounts at 1 January 2015:
€
96,000
Motor vehicles at cost
Amanda’s bank records for the year ended 31 December 2005 included the following payments:
Additional motor vehicles
€
72,000
The fixed assets owned by the business on 1 January 2015 had been purchased as follows:
Motor
Vehicles
£
Year of purchase
2012
2013
2014
36,000
24,000
36,000
96,000
Amanda provides for depreciation each year as follows:
Motor vehicles:
25% on cost
Depreciation is provided on an asset proportionately for the months of ownership.
During the year ended 31 December 2015, bank records showed that the business had sold a motor
vehicle for €20,000. This vehicle had been purchased in 2013 at a cost of €24,000.
REQUIRED
Prepare the following ledger accounts in the books of Amanda for the year ended 31
December 2015:
(a) Motor Vehicles
(b) Provision for Depreciation of Motor Vehicles
(c) Disposal of Motor Vehicles
QUESTION 4
Peggy produces her annual accounts with a year end of 31 December. She depreciates her motor
vehicles at 25% a year on the straight line basis.
Depreciation is provided on an asset proportionately for the months of ownership.
On 31 December 2014, her business owned three motor vehicles:
Motor vehicle W was purchased on 1 January 2012 for €32,000;
Motor vehicle X was purchased on 31 July 2013 for €36,000; and
Motor vehicle Y was purchased on 30 August 2014 for €38,000.
REQUIRED
(a) Calculate separately, for each of the motor vehicles W, X and Y, the accumulated depreciation at
31 December 2014.
On 1 May 20015, Peggy sold motor vehicle W for €12,400 and replaced it with motor vehicle Z,
which she purchased with a cheque for €40,000.
REQUIRED
(b) Prepare, for the year ended 31December 2015:
(i)
The Motor Vehicles Cost Account
(ii)
The Provision for Depreciation Account
(iii) The Disposal Account
Figures must be rounded to the nearest whole €.
QUESTION 5
On 1 January 2014 the balances in the books of Papas Ltd were €42.750 and €17.750 for Motor
Vehicles account and Provision for Depreciation on Motor Vehicles account respectively.
On 1 April 2014 the company received a cheque for €1.600 for the sale of one Motor Vehicle which
has been purchased on 1 November 2010 for €5.250
On 1 June 2015 the company purchased a new Motor Vehicle, by cheque, for €6.150
Depreciation is charged at 20% per annum on cost (straight line method) for each month of
ownership.
REQUIRED:
Prepare for the Year ended 31 December 2014 and 2015 the following accounts:
a) Motor Vehicles account
b) Provision for Depreciation on Motor Vehicles account
c) Motor Vehicles Disposal account.
Note: All workings must be shown.
QUESTION 6
Paphos Express Ltd depreciates its Lorries at the rate of 20% per annum, using the Straight Line
method for each month of ownership. On 1 January 2014 the Lorries account showed a debit balance
of €120.000. The Provision for Depreciation on Lorries account on the same day was €33.000.
A new Lorry was purchased on 30 April 2014 for €15.000 by cheque.
On 1 October 2014 the company received a cheque amounting to €3.000 for the sale of one Lorry
which was purchased on 1 August 2011 for €9.000.
REQUIRED:
Prepare for the years ended 31 December 2014 and 2015:
a) The Lorries A/c.
b) The Provision for Depreciation on Lorries A/c.
c) The Lorries Disposal A/c.
Note: All your workings must be shown.
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MODEL ANSWER TO QUESTION 1 CONTINUED
(d)
Provision for Depreciation of Machinery Account
2011
31 Dec
Balance c/d
€
1,800
1,800
2012
31 Dec
2013
31 Dec
31 Dec
Balance c/d
Disposal
Balance c/d
5,100
5,100
900
8,850
9,750
€
1,800
1,800
2011
31 Dec
Depreciation
2012
01 Jan
31 Dec
Balance b/d
Depreciation
1,800
3,300
5,100
2013
01 Jan
31 Dec
Balance b/d
Depreciation
5,100
4,650
9,750
2009
01 Jan
Balance b/d
8,850
(e)
Depreciation of Machinery Account
2011
31 Dec
PDM
€
1,800
1,800
2012
31 Dec
PDM
3,300
3,300
2013
31 Dec
PDM
4,650
4,650
€
1,800
1,800
2011
31 Dec
Profit & loss
2012
31 Dec
Profit & loss
3,300
3,300
2013
31 Dec
Profit & loss
4,650
4,650
Disposal
(f)
2013
31 Dec Machinery
€
6,000
6,000
2013
31 Dec
31 Dec
31 Dec
PDM
Bank
Profit & loss
€
900
3,000
2,100
6,000