ACCA FA2 DEPRECIATION EXPENSES
Kina depreciates equipment using the straight line method over an asset’s useful life. On 1 June 2012 she
bought new equipment with a useful life of 5 years and paid the supplier $87,400. The invoice showed that the
total was made up as follows:
| $ | |
| Equipment | 70,000 |
| Delivery | 1,400 |
| Installation | 7,000 |
| Maintenance for year to 31 May 2013 | 9,000 |
Suggested Solution.
| $ | |
| Equipment | 70,000 |
| Delivery | 1,400 |
| Installation | 7,000 |
| Total equipment cost capitalized | 78,400 |
| Annual depreciation based on 5 years | 15,680 |
| $ | |
| Annual depreciation expenses | 15,680 |
| Maintenance cost of equipment | 9,000 |
| Total expenses charged to Income Statement | 24,680 |
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