Acquisition, Depriciation, & Disposal of Delivery Van by Mr. Zohaib

Mr. Zohaib deals in many paper products. His main customers are stationaries, offices and other businesses. For delivery of his products Mr. Zohaib bought a Delivery Van which was available at ONEEB showrooms at a list price of 5 million. Following are the other transactions that took place.

  • After negotiations Mr. Oneeb alowed 2% discount.
  • Mr. Zohaib paid 5% of list price in taxes and registration.
  • Mr. Zohaib paid 350,000 for replacement of engine part which will increase Van's performance and its useful life.
Mr. Zohaib depreciate this Van on Reducing balance method at 11.30%. He sold this van after 5 years of use at 4,500,000.

a). Compute the cost of this Van, & Prepare asset at cost account.
b). Calculate and record depreciation for 5 years in respective accounts.
C). Compute (Loss)/ gain on this dislosal, & also prepare disposal account.