On 1april, 2005, Z Ltd. Purchased machinery for Rs. 1,20,000 & on 30 sep. 2006, it acquired additional machinery for Rs 20,000. On June 30 ,2007 one of the original machine (purchased on 1 April, 2005) which had the cost Rs 5000 was found to have become obsolete & was sold as scrap for Rs 500. On the same date a new machine was purchased for Rs 8000. Depreciation is to be charged @15%p.a. on written down method. Show machinery account for 3 years.
Answers
Answer:
On 1april, 2005, Z Ltd. Purchased machinery for Rs. 1,20,000 & on 30 sep. 2006, Depreciation
Explanation:
Profit/loss on sale = Sale price - WDV of the machine
= RS-60,000 - RS-55,000
= RS-5,000.
Working note:-
WDV of the machine = cost - depreciation on machine for 5 years
= 1,10,000 - (1,10,000 x 10/100 x 5 years)
= 1,10,000 - 55,000
= RS-55,000
In accountancy, depreciation is a term that refers to two components of the equal idea: first, the actual decrease of truthful price of an asset, such as the lower in fee of manufacturing facility system every yr as it's miles used and wear, and second, the allocation in accounting statements of the unique fee of the property to durations in which the property are used (depreciation with the matching principle).[1]
Depreciation is as a consequence the lower in the cost of assets and the technique used to reallocate, or "write down" the cost of a tangible asset (such as device) over its useful life span.
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