(ii) Explain why a long-term bank loan received by the company on 1 July 2016 was not
recorded in the statement of changes in equity.
Additional information
1 Balances at 1 January 2017 included the following.
$
Buildings
cost 400 000
provision for depreciation 38 000 Equipment
cost 256 000
provision for depreciation 61 000 Motor vehicles
cost 188 000
provision for depreciation 81 000
2 During the year ended 31 December 2017 the following took place: new equipment costing $37 000 was bought
a motor vehicle with an original cost of $10 000, bought during 2016, was sold.
3 The company’s depreciation policy is as follows:
buildings at a rate of 2% per annum using the straight-line method equipment at a rate of 10% per annum using the straight-line method
motor vehicles at a rate of 20% per annum using the reducing balance method.
A full year’s depreciation is charged in the year of acquisition and none in the year of disposal.
4 On 31 December 2017 the buildings were revalued at $650 000.
REQUIRED