Page 237 - Accountancy_F5

Notes
The new truck is recorded at TZS 30,000,000 (that is old: pick valuation of TZS 5,000,000
and cash consideration TZS 25,000,000) which is deemed to be its acquisition cost and
not the market value of TZS 32,000,000. The loss on disposal resulted because the book
value of the asset disposed was greater than its value at trade in.
The ledger accounts for recording disposal and acquisition of asset will appear as follows:
FOR ONLINE READING ONLY
Dr Old pick-up account Cr

TZS TZS
Date Details Date Details
“000” “000”
LANGUAGE EDITING
1 April 2022 Balance b/d 20,000 1 April 2022 Disposal 20,000
st
st
20,000 20,000

Dr Motor vehicle disposal account Cr
TZS TZS
Date Details Date Details
“000” “000”
1 April Old pick-up 20,000 1 April 2022 Accumulated
st
st
2022 depreciation 14,000
New pick-up 5,000
Income 1,000

20,000 statement 20,000

Dr New pick-up account Cr

TZS TZS
Date Details Date Details
“000” “000”
1 April Disposal 5,000 1 April
st
st
2022 Cash 25,000 2022 Balance c/d 30,000
30,000 30,000

Balance b/d 30,000

Exercise 7.6
On 1 January 2019 Kalambo Ltd purchased a second-hand plant for TZS 72,000,000
st
and immediately spent TZS 48,000,000 in putting the plant into working condition.
On 1 July 2019 additional plant costing TZS 48,000,000 was purchased. On 1 July
st
st
2021 the plant purchased on 1 January 2022 became obsolete and was sold for TZS
st
60,000,000. On 1 July 2024 another new item of plant was purchased at a cost of TZS
st

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