The following information was taken from the fixed assets register of HogwartsTraders. The vehicles indicated below are the only vehicles owned by the soletrader. The company has a 31 December year end.Hogwarts Traders: Asset RegisterHogwarts Traders: Vehicle 1DatePurchased:1 May 2015 Date CurrentdepreciationAccumulateddepreciationMake andreg.:Toyota Hilux2014 (FG765GP)31 Dec201521 333.33 21 333.33Purchasedfrom:Benji’s Car Sales(Credit)31 Dec201629 866.67 51 200.00Cost Price: 320 000.00 31 Dec201726 880.00 78 080.00Rate ofDepreciation:10% accordingto reducingbalancemethod.31 Dec201824 192.00 102 272.00Sold to: V. Limited. 31 Dec2019? ?Type of Sale: CashDate sold: 1 July 2019Selling Price: 250 000.00 Hogwarts Traders: Vehicle 2DatePurchased:1 August 2019 Date CurrentdepreciationAccumulateddepreciationMake andreg.:Hyundai Atos2019 (ZV109GP)31 Dec2019? ?Purchasedfrom:HyundaiAuto(Cash)Cost Price: R150 000Rate ofDepreciation:15% accordingto straight linemethod.
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.
The following information was taken from the fixed assets register of Hogwarts
Traders. The vehicles indicated below are the only vehicles owned by the sole
trader. The company has a 31 December year end.
Hogwarts Traders: Asset Register
Hogwarts Traders: Vehicle 1
Date
Purchased:
1 May 2015 Date Current
Accumulated
depreciation
Make and
reg.:
Toyota Hilux
2014 (FG765GP)
31 Dec
2015
21 333.33 21 333.33
Purchased
from:
Benji’s Car Sales
(Credit)
31 Dec
2016
29 866.67 51 200.00
Cost Price: 320 000.00 31 Dec
2017
26 880.00 78 080.00
Rate of
Depreciation:
10% according
to
balance
method
31 Dec
2018
24 192.00 102 272.00
Sold to: V. Limited. 31 Dec
2019
? ?
Type of Sale: Cash
Date sold: 1 July 2019
Selling Price: 250 000.00
Hogwarts Traders: Vehicle 2
Date
Purchased:
1 August 2019 Date Current
depreciation
Accumulated
depreciation
Make and
reg.:
Hyundai Atos
2019 (ZV109GP)
31 Dec
2019
? ?
Purchased
from:
Hyundai
Auto(Cash)
Cost Price: R150 000
Rate of
Depreciation:
15% according
to
method
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