Question

Repairs on overhauling of second hand machinery purchases journal entry

Answer 1

Journal Entry :

Machinery A/C   Dr   Rs.xx

     To Repairs A/C    Rs.xx

(Being repairs on overhauling of second hand machinery incurred)

EXPLANATION :

When a second-hand assset is purchased,expenditure incurred to bring the asset into working order is treated as capital expenditure.

In the given case, a second hand machinery is purchased and a sum of money is spent upon overhauling it and then installing it. The expenditure in overhauling and installation will be capital expenditure.

Similarly, if new machinery is purchased and installed,the expenditure upto the point the machinery is ready to work will be capital expenditure,but expenditure after it is ready to work will not be treated as capital.

Answer 2

Hey mate✌️✌️


Journal Entry ⏬⏬

Machinery A/c..........................Dr
...........To Repairs A/c



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