Problem
On 1 January 2020, Washington Ltd purchased a motor vehicle which is estimated to hare a $9000 residual value and a useful life of 6 years.
On 1 July 2021, the company purchased new equipment which is estimated to have a residual value of 15000 and useful life of 8 years.
The following is an extract from the statement of financial position showing the carrying amounts of these assets at 30 June 2024.
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Washington Ltd
Statement of Financial Position (extract)
30th June 2024
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Non-Current Assets
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Property, Plant and Equipment
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Plant and Equipment (at cost)
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$135000
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Less : Accumulated Depreciation
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45000
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90000
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48000
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Less : Accumulated Depreciation
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29250
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18750
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$108750
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Task
I. For each asset calculate the percentage of useful life expired.
II. What decisions will management need to make in the next financial year.
III. Prepare the journal entries to record depreciation expenses at 30 June 2025.
IV. Prepare a extract from the statement of financial position at 30th June 2025 (assuming no new assets have been purchased).