On 1 January 2017, Nyvice Limited purchases a specialized machine tool

On 1 January 2017, Nyvice Limited purchases a specialized machine tool for €20000.

The useful life of the machine tool is estimated to be five years. The residual value at the end of its useful life is expected to be zero. On l January 20X8, Nyvice purchases another machine tool for €4000. The second machine tool has an expected useful life of four years and a residual value of €400. On 3L December 2OX9, the company unexpectedly sells the first machine tool for €6000. Nyvice uses the straight-line depreciation method for its equipment.

Required:

Show how the statement of financial position and the statement of profit or loss of Nyvice Limited are affected by the purchase of the machine tools for the years 2O17, 2O18 and 2O19.

Here’s the SOLUTION

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