Respuesta :
Answer:
Hand Sanitizer Ltd
Relevant Ledger Accounts for the year ended 31st March 2019:
a) Plant Account
Date Description Debit Credit
GH₵ GH₵
April 1, 2018 Balance b/d 375,000
Dec 31, 2018 Plants Disposal Account 40,500
Dec 31, 2018 Cash for New Plants 52,500
Dec 31, 2018 Balance c/d 387,000
Total 427,500 427,500
b) Accumulated Depreciation - Plant
Date Description Debit Credit
GH₵ GH₵
April 1, 2018 Balance b/d 157,500.00
Dec. 31, 2018 Plants Disposal Account 27,427.10
March 31, 2019 Depreciation Expense 65,265.63
March 31, 2019 Balance c/d 195,338.53
Total 222,765.63 222,765.63
c) Plants Disposal Account
Date Description Debit Credit
GH₵ GH₵
Dec. 31, 2018 Plant Account 40,500
Dec. 31, 2018 Accumulated Depreciation 27,427.10
Dec. 31, 2018 Cash 12,000.00
Dec. 31, 2018 Loss on Disposal 1,072.90
Total 40,500 40,500
d) Depreciation Expense Account - Plant
Date Description Debit Credit
GH₵ GH₵
March 31, 2019 Accumulated Depreciation 65,265.63
Explanation:
a) Depreciation method is 30% on the diminishing value or the reducing balance. This is one of the methods of asset depreciation. Others are the straight-line method, the accelerated method, and production units method. The diminishing value method calculates depreciation based on the difference between the cost and accumulated depreciation, including disposals. The straight-line method applies the same amount over the useful life of the asset. The accelerated methods ensure that depreciation in the earlier years is greater than in the later years to balance the increasing maintenance costs associated with the asset as the years go by. A variant of the accelerated method is the production units method, which depreciates the asset according to the units of production each year.
b) Accumulated Depreciation on two plants on the reducing balance:
October, 2015 - March 2016 6 months (30% of 40,500 x 6/12) 6,075.00
April 1, 2016 to March 2017 12 months (30% of 34,425) = 10,327.50
April 1, 2017 to March 2018 12 months (30% of 24,097.5) = 7,229.25
April 1, 2018 to Dec. 2018 9 months (30% of 16,868.25 x 9/12) 3,795.35
Total 27,427.10
c) Depreciation Expense for March 31, 2019:
i) Depreciation on old plant (reduced balance):
Balance on asset = 375,000.00
Disposal = -40,500.00
Accumulated Depreciation = -130,072.90
Balance on asset = 204,427.10
30% on 204,427.10 = 61,328.13
ii) Depreciation on new plants:
30% of 52,500 x 3/12 = 3,937.50
i + ii = 65,265.63
d) One of the old plants had not yet been sold. So, nothing was realized from it so far. The GH₵4,500 that would be realisable from its sale had not yet happened and is not taken into account.
