Dig Deep Limited Dig Deep Limited is a construction company that has the following accounting policies relating to its non-current assets: Front-end loaders Depreciation is written off according to the reducing balance method at 20% per year. Truck Depreciation is written off according to the cost price method at 50% per year. Office building No depreciation is written off. Additional information: Description Date purchased Cost price Front-end loader A 1 January 2018 264 000 Front-end loader B 31 March 2020 303 400 Truck 31 July 2019 288 000 *Office building 1 September 2017 900 000 *A part of the office building, costing R100 000, was sold on 31 December 2019 at carrying value. This amount is included in the R900 000 above. Source: Klopper, J. 2020 Required Prepare the property, plant and equipment (PPE) note of Dig Deep Limited for the year ended 31 August 2020. No total column is required.
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Dig Deep Limited Dig Deep Limited is a construction company that has the following accounting policies relating to its non-current assets: Front-end loaders
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