Her books show the following list of balances (before any adjustment for depreciation) at 31 December 2012:
Required:
a) Prepare the income statement and statement of financial position for Zoe¨’s Snacks at 31 December 2012 making adjustments for depreciation of machinery and fixtures on the basis of the straight-line method of depreciation over 4 years, with an estimated residual value of nil.
b) Calculate the increase or decrease in net profit which would arise if Zoe¨ depreciated the machinery and fixtures on the basis of the straight-line method of depreciation over 7 years.
c) Calculate the net profit margin on the basis of (i) depreciating the non-current assets over 4 years; and, (ii) depreciating the non-current assets over 7 years.
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