Complete the following extract of the balance sheet (statement of financial position) of O'Gorman Ltd as at 31/12/2018 - Junior Cycle Business Studies - Question 8 - 2019
Question 8
Complete the following extract of the balance sheet (statement of financial position) of O'Gorman Ltd as at 31/12/2018.
Depreciation on buildings is 2% of cost
Depr... show full transcript
Worked Solution & Example Answer:Complete the following extract of the balance sheet (statement of financial position) of O'Gorman Ltd as at 31/12/2018 - Junior Cycle Business Studies - Question 8 - 2019
Step 1
Depreciation on Buildings
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Answer
To find the depreciation on buildings, we use the formula:
extDepreciation=extCostimesextDepreciationRate
Substituting the values:
extDepreciation=500,000imes0.02=10,000
Thus, the depreciation on buildings is €10,000.
Step 2
Depreciation on Vehicles
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Answer
For vehicles, the depreciation is calculated similarly:
extDepreciation=extCostimesextDepreciationRate
Substituting the values:
extDepreciation=65,000imes0.15=9,750
Thus, the depreciation on vehicles is €9,750.
Step 3
Net Book Value of Buildings
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Answer
The net book value can be computed using:
extNetBookValue=extCost−extDepreciation
Substituting the values:
extNetBookValue=500,000−10,000=490,000
Therefore, the net book value of buildings is €490,000.
Step 4
Net Book Value of Vehicles
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Answer
For the net book value of vehicles:
extNetBookValue=extCost−extDepreciation
Substituting the values:
extNetBookValue=65,000−9,750=55,250
Therefore, the net book value of vehicles is €55,250.
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