1
A company depreciates its plant at the rate of 25 per cent per annum, straight line method,
for each month of ownership. From the following details draw up the plant account and the provision
for depreciation account for each of the years 2004, 2005, 2006 and 2007.
2004 Bought plant costing £2,600 on 1 January.
Bought plant costing £2,100 on 1 October.
2006 Bought plant costing £2,800 on 1 September.
2007 Sold plant which had been bought for £2,600 on 1 January 2004 for the sum of £810 on
31 August 2007.
You are also required to draw up the plant disposal account and the extracts from the balance
sheet as at the end of each year.