On April 1st 2016 your company purchased an asset at a cost of 7 lacs and incurred Rs50000 on installation. The machinery being depreciated on WDV method every year. On March 31st 2019, the machinery was sold for Rs4.5 lacs.
a) Pass relevant journal entries to recognize the profit or loss and sale of asset
b) Calculate the profit or loss on disposal, Calculate Closing book value and depreciation for the years 2016-19
Answers
Please mention the percentage of depreciation or estimated life of the asset.
The depreciation is charged on the basis of fixed percentage rate on reducing balance.
Rate of depreciation (R) = [ 1- n√s/c ] 100
Where,
n= useful life of asset
S= scrap value
C = cost of asset
I will explained you with a example
For example the value of asset is 100000
cost WDV
(-) depreciation of 1 year @ 10 % 10000
Dep of 2 year ( 90000) 9000
Dep of 3 year (81000) 8100
So, this is the way by you can find out depreciation.
Answer:
The profit can be calculated due to certain solution and it used to keep account to the beneficiary.
Therefore, one could able to identify with better outcomes and firm purchased rs.50000 on April 1st 1998. It usually takes place in machinery and being depreciated in incurred for installation.
So, it used to help original cost less and pass necessary journal entries for 5 years.