Question

1. In what ways can non-current assets be disposed?
2. What do you understand by the trade in disposal?
3. Trust in him Enterprise has the following tasks at 1^st April, 2017.

NO.	TRUCK NUMBER	DATE ACQUIRED	COST OF VEHICLE GHȻ	ESTIMATE RESIDUAL VALUE GHȻ	ESTIMATED USEFUL LIFE
1	GT 124516	1st October, 2016	42,500.00	12,500.00	Five (5) years

NO.	TRUCK NUMBER	DATE ACQUIRED	COST OF VEHICLE GHȻ	ESTIMATE RESIDUAL VALUE GHȻ	ESTIMATED USEFUL LIFE
2.	GT 346717	1st April, 2017	60,000.00	10,000.00	Eight (8) years

Note: Estimated Residual value (ERV)

The company policy is to provide at the end of each financial year a change for depreciation using the straight line method, applied on month by month basis.

During the financial year ended 31^st March, 2017, the following occurred:

1. On 30^th June, vehicle No. GT 124516 was traded in and replaced by GE 147817 the trade in allowance was GHȻ 25,000.00.

GE 147817 Cost GH75,000.00 and the balance due that is after deducting the trade in allowance was paid partly in cash and partly by a loan of GH30,000.00 from Port Base Financial Service.

The GE 147817 estimate to have a residual value of GH20,000.00 after an estimated economic life for five (5) years.

The estimated remaining economic life of vehicle No.2 – GT 346717 was reduced from six (6) years to four (4) years with no change with the estimated residual value.

You are require to:

1. Show the journal entries to record the above transaction which occurred during the financial year ended 31^st March, 2018

2. Journal entry to record the depreciation of trucks for the year ended 31^st March, 2018.

3. Trucks account and provision for the depreciation account for the year ended 31^st March, 2018.

1. Show the necessary calculation clearly in the books
2. Post the items in their relevant ledgers.

Answer 1

Depreciation A/c Dr		1,500
Loss on 124516 Vehicle		16,000
To VeHicle 124516 A/c			17,500
Being The Vechicle Is Trade off Replaced With New Vehicle loss And Depreciation Is Charged to Profit And loss A/c
Vehicle 147817 A/c Dr		75,000
To 124516 Ve A/c (Trade off )			25,000
To CASH A/C			20,000
To Loan A/c			30,000
Being The Vehicle Purchsed And Posted in the books
Depreciation A/c Dr (500 pm* 9 months )		4,500
to Asset GT 147817			4,500
Being Depreciation Is Charges Per month Basis you need to Write Enteries 12 months Sepretely
Note: I shown in Single Entry journal
Depreciation A/c Dr (1041.67 pm )		12,500
to Asset GT 346717			12,500
Being Depreciation Is Charges Per month Basis you need to Write Enteries 12 months Sepretely
Provision / Profit And Loss A/c		18,500
To Depreciation A/c			18,500
Being Depreciation Is Charges Per month Basis you need to Write Enteries 12 months Sepretely

GT 124516
1/4/2017	To Balnce	42,500	30-06-2017	BY Depreciation	1,500
			30-06-2017	BY 147817 Trade Off	25,000
			30-06-2017	By Loss	16,000
		42,500			42,500

GT 147817
30-06-2017	To 124516 Ve A/c (Trade off )	20,000	31-03-2018	BY Depreciation for   months	4,500
	To CASH A/C	30,000
	To Loan A/c	25,000
			31-03-2018	By Balance	70,500
		75,000			75,000

GT 346717
30-06-2017	To Balance	60,000	31-03-2018	BY Depreciation for   months	12,500
			31-03-2018	By Balance	47,500
		60,000			60,000

Depreciation A/c
30-06-2017	to Depreciation	1,500
	to Depreciation	4,500
	to Depreciation	12,500
			31-03-2018	By Provision Carriford	18,500
		18,500			18,500

Calculation of Depreciation	Cost -Estimated Scrap Value
			NO Of Years Of Life
			60000-10000
			48 months
Depreciation per month	=	1041.667