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 $92,600. The invoice showed that the
total was made up as follows:
| $ | |
| Equipment | 80,000 |
| Delivery | 1,600 |
| Installation | 8,000 |
| Maintenance for year to 31 May 2013 | 3,000 |
Suggested Solution.
| $ | |
| Equipment | 80,000 |
| Delivery | 1,600 |
| Installation | 8,000 |
| Total equipment cost capitalized | 89,600 |
| Annual depreciation based on 5 years | 17,920 |
| $ | |
| Annual depreciation expenses | 17,920 |
| Maintenance cost of equipment | 3,000 |
| Total expenses charged to Income Statement | 20,920 |
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