ACC204 Finance Assignment: Depreciation, Leases, and Leave Analysis

This assignment solution provides a detailed analysis of various accounting concepts. It begins with calculating depreciation using the straight-line, sum-of-digits, declining-balance, and units-of-production methods for a delivery truck. The solution then presents journal entries related to building and land transactions, including revaluation adjustments. Furthermore, it delves into lease accounting, differentiating between finance and operating leases, and provides corresponding journal entries for both the lessor and lessee. Lastly, the assignment addresses annual leave obligations and related journal entries, including calculations for normal pay and leave loading. Desklib offers a wide array of solved assignments and study materials for students.

Running Head: ACCOUNTANCY 0
Finance

ACCOUNTANCY 1
Contents
Question 1........................................................................................................................................2
Question 2........................................................................................................................................3
Question 3........................................................................................................................................4
Part A...........................................................................................................................................4
Part B............................................................................................................................................4
Part C............................................................................................................................................5
Part D...........................................................................................................................................6
Question 4........................................................................................................................................6
Part A...........................................................................................................................................6
Part B............................................................................................................................................7

ACCOUNTANCY 2
Question 1
Straight Line
Method
Cost of
truck
Residual Value Depreciation
65000 5000
2012 10000
2013 10000
2014 10000
2015 10000
2016 10000
2017 10000
Sum of Digits
method
Cost of
truck
Sum of Digits
formula
Depreciation
65000 n(n+1)/2
21
2012 0.2857 18571.43
2013 0.2381 15476.19
2014 0.1905 12380.95
2015 0.1429 9285.71
2016 0.0952 6190.48
2017 0.0476 3095.24
Declining Method
Cost of
truck
Residual Value
65000 5000
Depreciation Rate 33% New Cost of Truck Depreciation
2012 60000.00 20000.00
2013 40000.00 13333.33
2014 26666.67 8888.89
2015 17777.78 5925.93
2016 11851.85 3950.62
2017 7901.23 2633.74

ACCOUNTANCY 3
Production
Method
Cost of
truck Production Units Proportion Depreciation
65000 246000
Residual Value 5000
2012 28000 0.113821138 6829.27
2013 34000 0.138211382 8292.68
2014 42000 0.170731707 10243.90
2015 55000 0.223577236 13414.63
2016 68000 0.276422764 16585.37
2017 19000 0.077235772 4634.15
Question 2
Journal Entries
Date Particulars Debit Credit
30th June
2018 Building 800000
To cash 800000
for building purchased in cash
30th June
2018 Loss on Revaluation 100000
To Building Account 100000
for loss booked on revaluation
30th June
2018 Accumulated Depreciation 100000
To Building Account 100000
for accumulated depreciation charged on building account
30th June
2018 Building Account 200000
To revaluation Surplus 200000
for revaluation surplus adjusted against the building account
30th June
2018 Land
100000
0
To cash
100000
0

ACCOUNTANCY 4
for land purchased in cash
30th June
2018 Land 100000
To Profit on Revaluation of Land 100000
for profit booked on the revaluation of land
30th June
2018 Factory Land 900000
To cash 900000
for factory land purchased
30th June
2018 Loss on Revaluation 200000
To Factory land 200000
for loss booked on the revaluation of factory land
Question 3
Part A
Present value of the minimum lease payments 316990
Fair value 351140
Hence, it is the finance lease 90%
Cash flows Interest rate @10%
Present
Value
180000
100000 0.909090909 90909.091
100000 0.826446281 82644.628
100000 0.751314801 75131.480
100000 0.683013455 68301.346
Present Value 316987
Part B
In the books of the Lessor
Date lease Receipt Interest revenue Receivable reduction lease Receivable

ACCOUNTANCY 5
Balance
7/1/2019 351140
30/06/202
0 100000 35114 64886 286254
30/06/202
1 100000 28625.4 71374.6 214879.4
30/06/202
2 100000 21487.94 78512.06 136367.34
30/06/202
3 150000 13636.734 136363.266 4.074
Journal Entries
Date Particulars Debit Credit
7/1/2019 Lease Receivable 351140
To Sales Revenue 351140
7/1/2019 Cost of goods Sold 180000
To inventory 180000
Date Particulars Debit Credit
30/06/202
0 Cash at Bank 100000
To Interest Revenue 35114
To Lease Receivable 64886
Part C
Date
Paymen
t Interest Expense Liability Reduction Lease liability Balance
7/1/2019 316990
30/06/2020 100000 31699 68301 248689
30/06/2021 100000 24868.9 75131.1 173557.9
30/06/2022 100000 17355.79 82644.21 90913.69
30/06/2023 100000 9091.369 90908.631 5.059
Journal Entries
Journal Entries
Date Particulars Debit Credit

ACCOUNTANCY 6
7/1/2019 Lessee's truck 351140
To Lessee’s Liability 351140
7/1/2019 Interest Expense 31699
To Leased Liability 68301
To Cash at bank 100000
30/06/202
0 Depreciation Expense 63398
To Accumulated Depreciation 63398
Part D
Journal entries
Date Particulars Debit Credit
30/06/202
3 Interest Expense 9091
To Leased Liability 90909
To Cash at bank 100000
30/06/202
3 Depreciation Expense 63398
To Accumulated Depreciation 63398
30/06/202
3 Truck Account
50000
To cash 50000
30/06/202
3 Truck Account
316990
To Lease Truck 316990
30/06/202
3 Accumulated Depreciation Leased Truck 253592
To accumulated Depreciation Truck 253592
Question 4
Part A
For 48 weeks at normal pay rate 100000*48/52
$
92,307.69
For 4 weeks inclusive of loading 100000*4/52*1.175 $

ACCOUNTANCY 7
9,038.46
Total Salary and Annual leave
$
101,346.15
Following will be the entry in case the lightning Bolt Limited recognizes the annual leave
obligation throughout the year.
Particular
s Debit Credit
Annual Leave Expense
Dr.
$
174.00
To provision for annual leave $ 174.00
Part B
If Lopez was to take two weeks annual leave, keeping in mind that the tax deducted is 1200, the
following journal entry will be as follows.
Particular
s Debit Credit
Provision for Annual Leave
$4,519.2
3
To PAYG Tax Payable
$1,200.0
0
To Cash at
Bank
$3,319.0
0
Journal entry for when Lopez is on Holidays
Particular
s Debit Credit
Annual Leave Expense
Dr.
$
174.00
To provision for annual leave
$
174.00