Page 242 - Accountancy_F5

Motor Date acquired Cost Estimated Residual Estimated

Vehicle Value Life (years)
TZS TZS
T101 AAT 1 Oct. 2018 8,500,000 2,500,000 5
st
T202 DTH 1 Apr. 2019 12,000,000 2,000,000 8
FOR ONLINE READING ONLY
st
Makame Transport Ltd’s policy is to provide at the end of each financial year depreciation
using the straight-line method applied on a month-by-month basis on all motor vehicles
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used during the year. During the financial year ended 31 March 2022, the following
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occurred:
(a) On 30 June 2021 T101 AAT was traded in and replaced by T303 KGC. The
trade-in allowance was TZS 5,000. T303 KGC costed TZS 15,000,000 and the
balance due (after deducting the trade-in allowance) was paid partly in cash and
partly by a loan of TZS 6,000,000 from commercial bank loan. T303 KGC is
expected to have a residual value of TZS 4,000,000 after an estimated economic
life of 5 years.
(b) The estimated remaining economic life of T202 DTH was reduced from 6 years
to 4 years with no change in the estimated residual value.
Required:
(i) Show any journal entries necessary to give effect to the above.

(ii) Show the journal entry necessary to record depreciation on motor vehicles for
the year ended 31 March 2022.
st
(iii) Reconstruct the motor vehicles account and the provision for depreciation account
for the year ended 31 March 2022. Show clearly the necessary calculations.
st
12. The statement of financial position of Tumaini Company Limited as at 31 st
December 2020 contains the following items:

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