Question

Grace Limited is a retailer in Hong Kong. The following is its trial balance as at 31 December 20X0.

	Dr					Cr
	$000				$000
Sales					912
Purchases	500
Administrative costs	10
Delivery expense	6
Plant and machinery – cost	220
Plant and machinery – Accumulated depreciation					49
Land	1,000
Revaluation reserve-land					50
Purchase return					25
Sales return and allowance	27
Transportation in/ Carriage inwards	9
Warehouse wages	101
Salesmen’s salaries	64
Administrative wages and salaries	60
Motor vehicles expenses	19
Directors’ remuneration	30
Ordinary share capital (1,320,000 share issued and fully paid)					1320
General reserve					16
Retained earnings as at 1 January 20X0					55
Inventory as at 1 January 20X0	66
Rental income					7
Trade receivables	326
Cash at bank	62
Trade payables					66
	2,500				2,500

The following additional information is supplied:

1. Depreciate plant and machinery at 20% on straight-line basis. No residual value for the plant and machinery.
2. Inventory at 31 December 20X0 is $90,000.
3. Auditors’ remuneration is $2,000.( Not yet accrued)
4. Income tax for the year will be $6,000, payable in October 20X1.
5. It is estimated that 60% of the plant and machinery is used in connection with distribution, with the remainder for administration. The motor vehicle expense should be allocated to distribution.
6. Land is revalued to be $1,500,000 at 31/12/20X0, and no depreciation is to be provided for the land.

Required:

Prepare a statement of profit or loss and other comprehensive income (the classification of expenses by function —showing the grouping of distribution cost and administration cost clearly) and a statement of financial position according to HKAS 1.

pls list the formula that how to calculate the depreication

Answer 1

The answer is solved in the attached file.