Question

2.2 Quick Deliveries began business to deliver fast food to customers on 1 March 2017. Two delivery motor bikes were purchased for R30 000 each. The financial year end of the entity is 28 February of every year and depreciation on the motor bikes is calculated at 30% per year according to the diminishing balance method. On 30 April 2018 one of the motor bikes was involved in an accident and was completely written off. Miraculously no one was hurt. R9 500 was received from the insurance company. Show workings to calculate the profit or loss on scrapping the motor bike.

Answer 1

a.	Bike was purchased on 01st March 2017 @30000
b.	Depreciation for 1st upto Feb 2018	9000
c.	Written down value of one bike as on 01st March 2018	21000
	(30000-9000)
d.	Depreciation upto 30th April 2018	1050
	(21000*2/12*30%)
e.	Written Down value of Bike as on 30th April 2018	19950
	(21000-1050)
f.	Insurance claim received for bike	9500
g.	Loss on scrapping bike (19950-9500)	10450