A machine was purchased on 1st jan 2018 for Rs 19400 and Rs 600 was spend on installation. On 1st july 2018 in the same year additional machinery costing Rs 1000 was purchase. On 1st july 2020 the machine purchased on jan 2018,having become useless was sold for Rs 8000 and on the same date a new machine was purchased at a cost of Rs 15000. Depreciation is provided annually on 31st Dec@ 10% per annum on original cost.Prepare Machinery Account from 1st jan 2018 to 31st Dec 2020.
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Answer:
The cost of a fixed asset is spread equally over its useful life using the straight-line depreciation approach.
Explanation:
This is the most popular and straightforward technique for computing depreciation expenses.
The expense amount is the same every year over the asset's useful life in straight-line depreciation.
The purchase of goods or services by the auditor from the auditee does not usually create a threat to the independence of the auditor if it is in the ordinary course of business and at arm's length price.
The Straight Line Method Depreciation Formula is as follows:
Depreciation Expense = (Cost – Salvage value) / Useful life
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