Depreciation, & Disposal of ventilation system

Foodwarm (PLC) acquired, and installed a vantilation system for its factory building. For this purpose Foodwarm incurred the following costs:

  • List price: 8,000,000
  • Trade discount: 10%
  • Site preparation & installation charges: 1,400,0000
  • Taxes & other duties amounted to: 800,000
  • Dismantling cost: 600,000
The estimated useful life is 16 years with 2,000,000 salavage value. Foodwarm provides depriciation on Reducing balance method basis.

Requirement 1: compute & record Depreciate of vantilation system in the books of Ventilation system for all 16 years.

  • Foodwarm disposed the ventilation system after 10 years of use for 5,000,000

Requirement 2: compute the (Loss)/ Gain on the disposal of this asset.