Ex 1

a) **Depreciation each year from 2012 to 2015

(40,000 – 2,000)/10= $3,800
Dr Depreciation expense $3,800
Cr Accumulated depreciation $3,800
** Carrying amount = (40,000 – 3,800x4) =$24,800
** Depreciation each year in 2016 and subsequent years
(24,800 – 700)/11 = $2,191
Dr Depreciation expense $2,191
Cr Accumulated depreciation $2,191
b)
** The profit or loss statement 2015 2016
Depreciation Expense 3,800 2,191
** The financial position statement
Accumulated depreciation 3,800x4 =15,200 15,200 + 2,191 =17,391
** Effect on 2015 net income = 3,800 – 2,191 = increase
Ex 2 :
a) **Depreciation expense in 2014
(20,000 -2,000)/10 = $1,800
Dr Depreciation expense $1,800
Cr Accumulated depreciation
**Carrying amount at Jan 1, 2015: 20,000 -1,800x1 = $18,200
**Depreciation expense each year from 2015 and subsequent years
(18,200 -3,000)/9 = $1,689
Dr Depreciation expense $1,689
Cr Accumulated depreciation

b) Present the affects of change in accounting estimate in financial

statement as at 31 Dec, 2015, also present one comparetive period
(2014)
** The profit or loss statement 2014 2015
Depreciation Expense 1,800 1,689
** The financial position statement
Accumulated depreciation 1,800x1 =1,800 1,800 + 1,689 =3,489
** Effect on 2015 net income = 1,800 – 1,689 = 111 increase
Ex 3:
a) **Depreciation expense in 2009
[(20,000 – 2,000)/10]/2 = $900
Dr Depreciation expense $900
Cr Accumulated depreciation
**Depreciation expense each year from 2010 to 2016
(20,000 – 2,000)/10 = $1,800
Dr Depreciation expense $ 1,800
 Cr Accumulated depreciation
**Carrying amount at Jan 1, 2017: 20,000 – 1,800x7,5= 6,500
**Depreciation expense each year from 2017 and subsequent years
(6,500 – 2,000)/12,5 = $360
Dr Depreciation expense $360
Cr Accumulated depreciation
b) Present the affects of change in accounting estimate in financial
statement as at 31 Dec, 2017, also present one comparetive period
(2016)
** The profit or loss statement 2016 2017
Depreciation Expense $1,800 $360
** The financial position statement
Accumulated depreciation 1,800x7,5 =13,500 13,500 + 360 =13,860
** Effect on 2017 net income = 1,800 – 360 =1,440 increase
5.3
a) **Depreciation each year from 1 July 2007 to 1 July 2012
(5,000,000 -0)/15 = $333,333
Dr Depreciation expense 333,333
Cr Accumulated depreciation
** Carrying amount = 5,000,000 -333,333x5 = 3,333,333
** Depreciation each year in 2013 and subsequent years
(3,333,333 – 0)/15 = 222,222
Dr Depreciation expense 222,222
Cr Accumulated depreciation
b)
** The profit or loss statement 2012 2013
Depreciation Expense 333,333 222,222
** The financial position statement
Accumulated depreciation 333,333x5 =1,666,665 1,666,665 +222,222 =
1,888,887
** Effect on 2013 net income = 333,333 – 222,222 = 111,111 increase