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Activity 7.3
            Consider two separate buildings in a school whereby one is used for classrooms and
            the other as administration block, then respond on the following questions:
             (i)  If the two buildings were constructed at the same time and have the same quality,
                 will they have the same useful life? Explain with reasons.
             (ii)  With reasons, explain which of the depreciation methods covered in this chapter
          FOR ONLINE READING ONLY
                 is appropriate to use in charging depreciation in each of the two buildings.
             (iii) Explain possible way(s) for disposing the building once they reach the end of
                 their useful life.
                       LANGUAGE EDITING
            Example 7.14
 LANGUAGE EDITING
            Majiji Secondary school had a pick-up truck that was purchased some years back for
            TZS 20,000,000. On 1  April 2022 the school decided to dispose of the pick-up on
                                  st
            a part exchange deal in addition to TZS 25,000,000 cash paid to acquire a new truck
            whose market value was TZS 32,000,000. At the time of disposal, the old pick up was
            valued at TZS 5,000,000 and its accumulated depreciation was TZS 14,000,000.

            Required:  Show the journal entries and ledger accounts to record disposal of the old
                       truck and acquisition of a new pick-up truck.


           Solution 7.14

                           The journal entries to record this event would be:
                                                                        Debit       Credit
            Date      Description                             Folio     TZS          TZS
                                                                        “000”       “000”
            1  April  New pick-up truck                                   30,000
             st
            2022      Accumulated depreciation                            14,000
                      Loss on disposal of pick-up truck                    1,000


                       Cash account                                                   25,000
                       Pick-up truck (old)                                            20,000
                      To remove from books the disposed
                      old pick-up truck, record the loss on
                      disposal of old pick-up truck, record
                      acquisition  of  new  pick-up  truck  and
                      close accumulated depreciation of the
                      disposed pick up.







            Student’s Book Form Five
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