On 1 January, 2010, Ahafoman Contractors (AC) bought an Heavy Duty Crane machine from Tractor and EquipmentCompany (TEC) on Hire Purchase. The terms of the agreement were that an initial deposit of GHS200,000 was payable , followed by three installments of GHS189,890 on 31 December in each of the years from 2010 onwards.. TEC sells the machine for cash at GHS600,000. AC depreciates cranes at the rate of 25% on cost (assuming a nil residual value) The accounting years for both TEC and AC end on 31 December. Required b) Apportion the Hire Purchase Interest over the relevant years using the Sum of the digits method
On 1 January, 2010, Ahafoman Contractors (AC) bought an Heavy Duty Crane machine from Tractor and EquipmentCompany (TEC) on Hire Purchase. The terms of the agreement were that an initial deposit of GHS200,000 was payable , followed by three installments of GHS189,890 on 31 December in each of the years from 2010 onwards.. TEC sells the machine for cash at GHS600,000. AC depreciates cranes at the rate of 25% on cost (assuming a nil residual value) The accounting years for both TEC and AC end on 31 December. Required b) Apportion the Hire Purchase Interest over the relevant years using the Sum of the digits method
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 1PA: On January 1, 2018, King Inc. borrowed $150,000 and signed a 5-year, note payable with a 10%...
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On 1 January, 2010, Ahafoman Contractors (AC) bought an Heavy Duty Crane machine from Tractor and EquipmentCompany (TEC) on Hire Purchase. The terms of the agreement were that an initial deposit of GHS200,000 was payable , followed by three installments of GHS189,890 on 31 December in each of the years from 2010 onwards.. TEC sells the machine for cash at GHS600,000. AC
The accounting years for both TEC and AC end on 31 December.
Required
b) Apportion the Hire Purchase Interest over the relevant years using the Sum of the digits method
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