Question

3 Furniture and vehicles were purchased on 1 July 20.21 at R80 000 and R300 000 respectively. Depreciation is written off on furniture at 12,5% per year on cost and on vehicles at 20% per year on the diminishing balance method. The necessary write- offs for the current year have been made.
4 The business is not registered for VAT.
calculate the depreciation for both assets.

Answer 1

To calculate the depreciation for both furniture and vehicles, let's follow the respective depreciation methods stated.

### 1. Furniture
- **Cost of Furniture**: R80,000
- **Depreciation Rate**: 12.5% per annum
- **Calculation**:
\[
\text{Depreciation (Furniture)} = \text{Cost} \times \text{Depreciation Rate}
\]
\[
\text{Depreciation (Furniture)} = R80,000 \times 12.5\%
\]
\[
\text{Depreciation (Furniture)} = R80,000 \times 0.125 = R10,000
\]

### 2. Vehicles
- **Cost of Vehicles**: R300,000
- **Depreciation Rate**: 20% per annum (diminishing balance method)
- **Calculation**:
\[
\text{Depreciation (Vehicles)} = \text{Cost} \times \text{Depreciation Rate}
\]
\[
\text{Depreciation (Vehicles)} = R300,000 \times 20\%
\]
\[
\text{Depreciation (Vehicles)} = R300,000 \times 0.20 = R60,000
\]

### Summary of Depreciation for the Current Year
- **Depreciation for Furniture**: R10,000
- **Depreciation for Vehicles**: R60,000

Thus, the total depreciation expense for the year is:
\[
\text{Total Depreciation} = \text{Depreciation (Furniture)} + \text{Depreciation (Vehicles)} = R10,000 + R60,000 = R70,000
\]

### Conclusion
- **Depreciation for Furniture**: R10,000
- **Depreciation for Vehicles**: R60,000
- **Total Depreciation**: R70,000