A firm purchased a machine on 1st January 2013 for 1,12.250 and estimated that it would
be sold at the end for 12,250. On 1st July, 2014 and on 15 January, 2015 two more
machineries were purchased for 32,000 (residual value 2,000) and 18,500 (residual
value *2,500) respectively. The expected life of all the machines in 5 years.
Prepare machinery account for the year ending 31st December, 2013, 2014, 2015 and 2016
Providing depreciation according to stright line method [Ans. Balance b/d 61,350]
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Answer:
Purchase Price of Machine on 1.01.2013 = Rs 25,000
Rate of Depreciation = 30% p.a
Calculation of depreciation as at 31st December 2014
Original cost as on 1.01.2013 = Rs 25,000
Less: Depreciation at the end
as on 31.3.2013
(25,000 X 30% X 3/12) = Rs (1875)
Book Value as on 1.01.2013 = Rs 23125
Less: Depreciation at the end
On 31.3.2014 = Rs (6937)
Book Value on 31.12.2014 = Rs 16187.5
Less: Depreciation till
31.12.2014 = Rs (3642.18)
Book Value as at 31.12.2014 = Rs 12545.3
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