Page 233 - Accountancy_F5
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Date            Description                       Folio     Debit       Credit
                                                                      TZ “000”    TZS “000”
            31  Dec. 2024   Accumulated depreciation on motor             12,500
              st
                            vehicle account
                            Disposal of motor vehicle account                          12,500
                            Removal of accumulated depreciation
          FOR ONLINE READING ONLY
                            from books of the disposed motor
                            vehicle
            31  Dec. 2024   Cash account                                   3,000
              st
                            Disposal of motor vehicle account                           3,000
                            To record receipt of proceeds from the
                            disposed motor vehicle
                      LANGUAGE EDITING
            31  Dec. 2024   Disposal of motor vehicle account                500
              st
                             Statement of P/L                                             500
                            To record gain on disposal of motor
                            vehicle.


           Dr                                             Motor vehicle disposal account                                          Cr
                                          TZS                                            TZS
            Date            Details                 Date      Details
                                          “000”                                         “000”
            Dec. 31 , 2024  Motor vehicles   15,000 Dec. 31 ,  Accum. depreciation     12,500
                                                           st
                   st
                            Disposal gain       500 2021      Cash                      3,000
                                             15,500                                    15,500

           Disposal of non-current asset before the end of useful life

           A non-current asset may be disposed before the end of its useful life. When the PPE is
           sold in this scenario, it is necessary to be certain that depreciation has been provided for
           up to the time of sale. Usually, before recording the sale, an entry must be made to record
           depreciation up to the date of disposal. The depreciation figure will depend on the policy
           of the business, whether to record a partial or a full year’s depreciation or none at all.

            Example 7.13
            On 1  April 2022; Jitegemee Company Limited sold one of its machines for TZS
                 st
            5,500,000 cash. The machine was bought on 4  July 2019, for TZS 15,000,000 cash
                                                         th
            and expected to have a service life of five years, with no residual value. The business
            uses straight line method of depreciation.
            Required:  Show the relevant journal entries, accumulated depreciation account and
                       machinery disposal account at 31  Dec 2022.
                                                       st







                                                                         Student’s Book Form Five
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     ACCOUNTANCY_DUMMY_23 JUNE.indd   220
     ACCOUNTANCY_DUMMY_23 JUNE.indd   220                                                   23/06/2024   17:35
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