Diploma in Accounting
Assessment Task 2:
Part A
In the Australian Taxation Office (ATO), depreciation rules and relevant legislation determine that in the small business, 15% depreciation applies to assets in the first year. After the first year, 30% depreciation applies.
- Calculation of depreciation, if the assets are one year old:
| Non-Current Assets | Amount | Depreciation 15% | Value of Assets after deprivation |
| Computer | 2,500 | 375 | 2,125 |
| Coffee Equipment | 5,000 | 750 | 4,250 |
| Company Car | 20,000 | 3000 | 17,000 |
- Calculation of depreciation, if the assets are more than one year old:
| Non-Current Assets | Amount | Depreciation 30% | Value of Assets after depreciation |
| Computer | 2,500 | 750 | 1,750 |
| Coffee Equipment | 5,000 | 1500 | 3,500 |
| Company Car | 20,000 | 6000 | 14,000 |
Part B
In order to complete this task, the following assumptions are developed
| Non-Current Assets | Amount | Useful life | Residual Value |
| Computer | 2,500 | 10 Years | 500 |
| Coffee Equipment | 5,000 | 10 Years | 1000 |
| Company Car | 20,000 | 10 Years | 4000 |
Depreciation cost –
Formula of straight line depreciation method – (Cost – residual value) / Useful life (Henderson et al., 2015)
Computer = (2500 – 500) / 10
= 200
Coffee equipment = (5000 – 1000) / 10
= 400
Company Car = (20000 – 4000) / 10
= 1600
Transfer the capitalised cost of asset sold –
| Assets disposal by sale | Dr | Cr |
| Cash | 5500 | |
| Accumulated Depreciation | 22000 | |
| Loss on sale | 0 | |
| Computer | 2500 | |
| Coffee Equipment | 5000 | |
| Company Car | 20000 |
On the basis of the given assumption, it is found that there is no loss or profit on the sales of the assets.
Assessment Task 3:
Assuming that Bean’s Coffee uses an accrual accounting system, note the following additional information for Balance Day adjustments as at 30 June 2012;
Using the Trial Balance and above additional information;
- Determine accrued income – In the accounting language, accrued income is a kind of the income that has earned but not received (Schaltegger and Burritt, 2017).
- Identify accrued expenses – Accrued income is the opposite of the accrued income. It refers to a kind of expenses that is happened but not paid yet.
- Determine pre-paid income – Prepaid income is a kind of the income in which situation, income is revived but it is not earned.
- Identify pre-paid expenses – Pre-paid expenses are determined as a kind expenses in which expenses are paid but it does not happen when payment is done (Buchanan and Davis, 2018).
- Record coffee equipment purchased at the end of the period
Coffee equipment AC Dr
To Cash/bank Dr
(Coffee equipment purchases at end of period)
- Account for inventories and prepare for transfer to final accounts
Closing AC Dr
To trading AC
(Inventory transferred into the trading account)
- Write off debts
Account receivables AC Dr 5,975
To allowance for the doubtful debts 5,975
(Debtors account written off)
- Calculate depreciation
Depreciation cost of furniture
Value of furniture account – 20000
Life of the furniture – 10 years
Disposal value – 2000
The formula of the straight-line method – (purchase value – disposal value) / Year (Macve, 2015)
= (20000 – 2000) / 10
= 1800
Depreciation cost of Coffee equipment
Value of Coffee equipment account – 15000
Life of the Coffee equipment – 8 years
Disposal value – 1800
The formula of straight-line method – (purchase value – disposal value) / Year
= (15000 – 1800) / 8
= 1650
- Staff wages expenses
Wages account AC Dr 4750
To cash/ bank account 4750
Assessment Task 4:
The completion of this unite was a great example for me because I have learned the lots of things from this related accounting and finance. This unit was helpful for me to understand the different concept such as assets and liabilities.
In this, I was found that assets and liabilities can be divided into two categories such as current assets and liabilities and non- current assets and liabilities (Macve, 2015).
The meaning from the current assets is that it includes those assets that can be converted into the cash in a short period. At the same time, the current liabilities refer to those liabilities that are due in the short time or within the year. Beside of this, non-current assets are those assets which are life are 2 years or more such as furniture and machinery.
In the same concern of this, the non-current liabilities refer to the liabilities that are due in 2 years and more such as long term bank loan (Horak and Boksova, 2018)
Furthermore, it can also be said that the completion of this unit is also significant in order to develop an understanding of the different terms of the accounting and financial statements.
In this, it is found that depreciation is one of the significant terms of financial accounting that is applied to fixed assets. It is kind of the cost that has occurred due to the use of the assets. It is also learned in this that general and ledger are also part of the accounting process that is aimed to record and summarise the financial (Dutta and Patatoukas, 2016).
References
Henderson, S., Peirson, G., Herbohn, K. and Howieson, B., 2015. Issues in financial accounting. Pearson Higher Education AU.
Horak, J. and Boksova, J., 2018. Influence of Big Data on Financial Accounting. International Advances in Economic Research, 24(2), p.205.
Macve, R., 2015. A Conceptual Framework for Financial Accounting and Reporting: Vision, Tool, Or Threat?. Routledge.
Buchanan, D.L. and Davis, M.H., 2018. Cash Flow Modelling and Financial Accounting. World Scientific Book Chapters, pp.7-37.
Dutta, S. and Patatoukas, P.N., 2016. Identifying conditional conservatism in financial accounting data: theory and evidence. The Accounting Review, 92(4), pp.191-216.
Schaltegger, S. and Burritt, R., 2017. Contemporary environmental accounting: issues, concepts, and practice. Routledge.
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