Question

Lysander Ltd is preparing its financial statements for the year ended 31 December 2015. At
31 December 2014 it had computer equipment that cost £1,004,408, all of which had been
purchased on 1 January 2013, and had accumulated depreciation at 31 December 2014 of
£697,600. Computer equipment is depreciated on a straight line basis with no residual value
over four years and is charged on a monthly basis. A computer system, costing £6,800, was
sold on 1 January 2015 for £1,800. On 1st April 2015 Lysander part exchanged a computer
which had cost £24,000, for a new computer, costing £34,600, paying a cheque in final
settlement of £18,000.
Show how the computer equipment of Lysander Ltd will be shown in the:
i. Income statement for the year ended 31 December 2015, and
ii. Statement of financial position as at 31 December 2015.

Answer 1

Solution:

1)

Income Statement
Depreciation on computers	(251,309)
Profit on disposal (W3)	4,500

　

2)

Statement of Financial position
Non current assets
Computer equipment - cost	1,008,208
Accumulated depreciation	(930,590)

　

Working:

	Cost	Accumulated dep
As at 01st Jan	1,004,408	697,600
Sale	(6,800)	(3,400)
New computer	34,600
Ppart X(W1)	(24,000)	(13.500)
Depreciation (W2)		249,890
	1,008,208	930,590

　

W1: 27 months * (24,000 / 48) = 13,500.

W2
Original	973,608 / 4	243,402
New	(34,600/48) * 9	6,488
Part X	(24,000/48) * 3	1,500
		251,390

W3
Loss on sale	1800 - 3400	-1,600
Profit on PX	16,600 - 10,500	6,100
		4,500