A company purchased machinery costing Rs. 2,00,000 which included a Boiler costing
Rs. 20,000. Depreciation has been written off the machinery account on reducing balance
method for the last 4 years at the rate of 10%. During the current year (fifth) the Boiler
became useless and was sold for Rs. 4,000. Write up machinery account for five years.
[Ans. Loss on sale Rs. 9,122, Balance of machine A/c Rs. 1,06,298-20.]
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Answer:
Calculation of Loss on Sale of Boiler:
₹
On of Boiler
20,000
Less: Depreciation for 4 years (Rs 2,000+ Rs 1,800 + Rs 1,620 + Rs 1,458)
6,878
Book value in the beginning of 5th year
13,122
Less: Sale proceeds
4,000
Loss on Sale of Boiler
9,122
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