Creative Minds Foundation

Trading account includes all the expenses related to production. All the indirect expenses comes in profit and loss account. That's why carriage outward appears in profit and loss account and carriage inward appears in trading account.

Part 2
Depreciation on Equipment

Method used - Diminishing balance Method ( 10%)

Financial year 1Mar 2010 to 28Feb 2011
48000×10/100×2/12 = 800

Financial year 1Mar 2011 to 28feb 2012
48000-800=47200 ( CV)
47200× 10/100 =4720

Financial year 1Mar 2012 to 28 Feb 2013
42480×10/100 = 4 248
15000× 10/100×6/12 = 750
750+4 248=4 998

Let's move to ledgers🏃🏃🏃

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Solution part 1

Depreciation Calculation

VEHICLE

1. year 1Mar 2010 - 28 Feb 2011
120 000 × 20/100 × 12/12 =
24000

2. Year 1Mar 2011- 28feb 2012
120000×20/100 = 24000

3.Year 1Mar 2012- 28 Feb 2013
120000× 20/100 =24000
160000 × 20/100 × 3/12 = 8000
Dep = 24000+8000=3200

Helle Hi Fam! 😊

Let's all have a productive week and work this problem out.

Formula to calculate Depreciation

•Straight line method
Cost price - % = Depreciation

e.g Vehicle was bought for R5000 on 1 March 2020, depreciation is calculated at 15% .

5000 × 15% × 12/12 =

Hello Hi 👋

Depreciation📑

• is a non cash expense that reduces the value of an asset { Equipment & Vehicle}
• as a result of wear and tear , age, or obsolescence
• depreciation is an Expense
• is brought into account at the end of the financial year or when an asset is sold

Two methods of depreciation

∆ Cost method / straight line method/ fixed installment method.

∆ Diminishing balance method /Reducing Balance method/Book value method.

Hello hi👋
Before we get into details let's describe the following terms.

Tangible Assets/fixed assets

•Are purchased to generate income
•consist of Land&Buildings ,equipment and Vehicle
•they have a life span of more than one financial year hence they classified as non-current assets

Hello Hi👋

Will be doing Tangible Assets : Acquisition,Depreciation, Disposal for this week !📙

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Buckle up As we heading for distinctions in Accounting😸😸

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