Has been trading for some time now and has acquired some fixed assets since » Activity 5.5
Pallo is the owner of a successful business called Pallo's Computer Shop He
starting his business on 1 March 2015. The financial year for the business is
1 March to 28 February
Required
1. Calculate the balance in the Accumulated Depreciation on Vehicles account
as on 1 March 2017
2. Calculate the amounts to be written off as depreciation on vehicles and
equipment for the current financial year, 1 March 2017 to 28 February 2012
3. What amount will be closed off to the Profit and Loss account for
depreciation on the last day of the financial year, 28 February 2018?
4. What will the balance in the Accumulated Depreciation on Vehicles and
Accumulated Depreciation on Equipment accounts be on 28 February 2018?
5. What type of account is Depreciation?
6. What type of account is Accumulated Depreciation on Vehicles?
Information
The following information concerning fixed assets is relevant to the business
Pallo's Computer Shop owns three vehicles:
Toyota Tazz, purchased on 1 March 2015 for R130 000 cash
Opel Corsa, purchased on 31 December 2015 for R150 000 on credit
Nissan One Tonner, purchased on 1 July 2016 for R165 000 cash
All equipment owned up to 1 March 2017 was bought when the business
opened on 1 March 2015 for R82 800. Accumulated depreciation on
equipment as on 1 March 2017, the first day of the financial year, amounted
to R29 800.
On 1 September 2017, equipment to the value of R7 500 was purchased on
credit from Southern Equipment.
Depreciation is written off as follows:
Vehicles at 15% p. a. at cost price
Equipment at 20% p. a. according to the diminishing balance method
No new vehicles were purchased during the current financial year.​