Question

ABC company ltd purchase machinery on first October 2012 for Rs56000. It pays installation charges Rs4000. Depreciate machinery @20%per annum. If depreciation is charged on fixed method and books are closed on 31 December every year. Prepare account for 5 years

Answer 1

56000+4000= 60000 total for machinery
56000 x 20/100= 11,200(deprication) every year
fr 2012 60000-11200= 48800
for next 2013 48800-11200=37600
for next 2014 37600-11200=26400
for next 2015 26400-11200=15200
for next 2016 15200-11200=4000
calculate on both sides you will get equal write in credit side column profit or loss4000

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