1.

Cahaya Suria bought a motor van on 1 January 2006 which costs RM100 000
with a residual value of RM40 000 and estimated useful life of 6 years. The
company uses straight line depreciation method. On 2 August 2009, they disposed
the motor van for RM55 000. The depreciation policy of the company is based on
the month of ownership. Accounting year ended on 31 December every year.

Required:
(a) Prepare the motor van account.
(b) Prepare the provision for depreciation for motor van account.
(c) Prepare the disposal account.
(d) The manager of Cahaya Suria would like to know factors to be considered
in determining the depreciation for an asset. List the three factors.

2. Jamal and Jamil are twins and both of them have their own business. On 1
January 2007, they bought two photocopy machines with similar model for their
business for RM28 000 each. The estimated useful life for both machines is five
years and the scrap value is estimated at RM3 000 each. Jamal prefers to
depreciate his machine using the straight-line method while Jamil depreciates his
machine using reducing balance method at a rate of 30% annually. In order to
avoid obsolescence, Jamal and Jamil sold their photocopy machines on 31
December 2009 for RM12 000 each. The accounting period for both Jamal and
Jamil businesses end on the 31 December every year. The depreciation policy of
the company is based on the month of ownership.

Required:
(a) Prepare separate equipment accounts for Jamal and Jamil for the year
ended 31 December 2007, 31 December 2008 and 31 December 2009.
(b) Prepare separate provision for depreciation accounts for Jamal and Jamil
for the year ended 31 December 2007, 31 December 2008 and 31
December 2009.
 (c) Prepare separate disposal accounts for both machines as at 31 December
2009.
(d) Briefly explain the concept of consistency that applies to depreciation.
(e) If depreciation was ommitted, explain the effects on financial statements.

3. Bina Maju Enterprise bought two machines on credit from JCB Supplier on 1
January 2010 for RM12 000 and another for RM36 000. Depreciation of 25% per
annum is to be charged using the reducing balance method. On 31 December
2011, the machine that was bought for RM36 000 was traded-in to AAM
Machinery for RM18 000 for a new machine valued at RM40 000. The difference
will be settled by 1 March 2013. Accounting year-end is 31 December every year.

Required:
(a) Prepare the Machinery Account for the years 2010 and 2011 respectively.

(b) Prepare the Provision for Depreciation Account for each of the years 2010
and 2011.

(c) Prepare the Machinery Disposal Account.

(d) List four factors to be considered in estimating depreciation of fixed

assets.

4. In the year 2002, Indera Mahkota Sdn. Bhd. has bought the following machines
by cash:

Date Machine Cost (RM) Useful life Residual value

(RM)
1 Jan. KZ0001 42 000 4 years 6 000
10 April KZ0002 40 000 4 years 8 000
1 Sept. KZ0003 48 000 5 years 8 000
 (i) On 31 Augu st 2005, the KZ0003 has been sold at RM22 000 cash. The
accounting book of Indera Mahkota Sdn. Bhd. close at 30 September each
year. Its policy is to depreciate the machines for each month of
ownership.
Required:
(a) Prepare the Machinery Account and Provision for depreciation Account
for the year ended 30 September 2002, 2003, 2004 and 2005 .
(b) Prepare the Disposal Account for the year ended 30 September 2005.

5. The accounting book of Permata Sinar Sdn. Bhd. shows the following records of
equipment acquisition (all transactions in cash):

Date Cost (RM) Residual Useful life

value (RM) (years)
1 August 2000 18 000 3 000 5
5 February 2001 13 500 1 500 5
30 September 2001 12 000 2 000 4

On 1 October 2003, an equipment which was bought on 5 February 2001 was

sold for RM3 000 cash. Accounting policy for depreciation is to depreciate the
equipments for each month of ownership.

Required:
Prepare the following accounts for the year ended 30 June 2001, 2002, 2003 and
2004:
(i) Equipment account.
(ii) Provision for depreciation account.
(iii) Disposal account.

6. Syarikat Besi Waja Sdn. Bhd. has started its operation since 1 January 2005 and
closes its accounts at 31 December each year. On 1 January 2005, the company
purchased four machines at RM15 000 each and a van at a cost of RM48 000. The
 expected useful life of each machine is 5 years with no salvage value while the
van is expected to be used for 5 years with expected resale value of RM6 000.

On 31 March 2007, one of the four machines was sold for RM6 000 cash. Due to
continuous breakdown, the van was sold at loss of RM2 000 on 30 September
2007.

The company uses straight-line method to depreciate both assets.

Required:
Prepare
(i) Machine and Motor Vehicle accounts and Provision for depreciation
accounts for each asset for the year 2005, 2006 and 2007.
(ii) Disposal Account in for the year ended 31 December 2007.

7. Kasturi Enterprise bought a machinery on 1 July 2009 at cost of RM20,000. The

useful life of the machine is 9 years and the residual value is RM2000. The policy
of the business is to depreciate its assets on the month of ownership basis. Kasturi
Enterprise use straight-line method to depreciate its assets and close its account on
31 December every year. On 30 June 2014, Kasturi Enterprise disposed the
machine for RM4 000 cash.

Required:
Prepare
(i) Machinery account and Provision for depreciation accounts for the year
ended 31 December 2012, 2013 and 2014.
(iii) Disposal Account in for the year ended 31 December 2014.