the carrying value of the vehicles as at 28 February 2022 would be R229,050.
CV of Vehicles: R229,050
User
SA Traders is a registered VAT vendor. The following information was recorded in the accounting records of SA Traders as at 28 February 2022 (the financial year-end):
R
Office furniture at cost
228 500
Vehicles at cost
575 000
Accumulated depreciation: Office furniture (1 March 2021)
89 650
Accumulated depreciation: Vehicles (1 March 2021)
230 950
The office furniture is depreciated at 30% per annum, using the straight-line method. Vehicles are depreciated at 20% per annum, using the reducing balance method.
What will be the carrying value of the vehicles as at 28 February 2022?
ChatGPT
To calculate the carrying value of the vehicles as of 28 February 2022, we need to determine the accumulated depreciation for the vehicles up to that date and subtract it from the cost of the vehicles.
Given information:
Cost of vehicles: R575,000
Accumulated depreciation for vehicles as of 1 March 2021: R230,950
Depreciation rate for vehicles: 20% per annum (reducing balance method)
First, let's calculate the depreciation expense for the vehicles from 1 March 2021 to 28 February 2022:
Depreciation expense = Cost of vehicles * Depreciation rate
Depreciation expense = R575,000 * 20% = R115,000
Next, we can calculate the accumulated depreciation for the vehicles as of 28 February 2022:
Accumulated depreciation (28 Feb 2022) = Accumulated depreciation (1 Mar 2021) + Depreciation expense
Accumulated depreciation (28 Feb 2022) = R230,950 + R115,000 = R345,950
Finally, we can calculate the carrying value of the vehicles:
Carrying value (28 Feb 2022) = Cost of vehicles - Accumulated depreciation (28 Feb 2022)
Carrying value (28 Feb 2022) = R575,000 - R345,950 = R229,050