Test_3_sem2_05 - Question 1 Depreciation All figures given...

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Question 1 – Depreciation (23 marks) All figures given in this question are GST exclusive. Skyline Printers purchased the following assets on 1 April 2004: Cost Depreciation method Residual Value Useful Life Office equipment $20,000 Straight-line $2,000 5 years Printing machine $405,000 Unit-of- Production $25,000 10 years or 5 million copies Computer Equipment $12,000 Diminishing value (at 30%) $2,800 4 years Balance day for Skyline Printers is 30 September. The meter reading of the printing machine showed the following usage: 30 September 2004 – 300,000 copies 30 September 2005 – 650,000 copies The firm is registered for GST on the invoice basis. REQUIRED a) Calculate the depreciation charges for the years ending 30 September 2004, and 30 September 2005 for each of the assets. (11 marks) b) Prepare a general journal entry to record the depreciation charge for the printing machine for the year ended 30 September 2004. A narration is required. (2 marks) c) Show how the printing machine would appear in the Balance Sheet as at 30 September 2005. (2 marks) d) Discuss why it might be necessary for a business to review depreciation regularly. (4 marks) e) At 30 September 2005 a decision is made to review the depreciation on the office equipment. It is considered that the office and its equipment will need a complete upgrade and it is decided that this will be planned for at the end of September 2007. It is considered that the office equipment at this time will have a revised residual value of $3,000. Calculate the depreciation for the year ended 30 September 2006. (4 marks) ALAF5206 – Test 3 – Semester 2, 2005 Page 1 of 9
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Question 2 – Inventory Costing (14 marks) First-in first-out (FIFO) All figures given in this question are GST exclusive. Louie Redford owns and operates a small business selling travel bags. The business, Redbags Ltd is registered for GST on the invoice basis. The records at the end of March 2005 for Redbags Ltd showed the following details for one particular item of merchandise in the business: Product : Airliner Special Transaction Date Units Total Cost
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Test_3_sem2_05 - Question 1 Depreciation All figures given...

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