Question

Straight Line Method/Fixed Instalment Method
Life of Asset Given in Years

On 1st April, 2016, a machine was purchased for 35,000. The estimated life of the machine
is 5 years after which its break up value will be 5,000 only. Prepare the machinery account
for the first three years, by straight line method assuming that the books are closed on 31st
March​

Answer 1

Answer:

Systems. Its

payment is to be made in 4 half-yearly instalments of 25,000 each. Rate of interest is 8% per annum. Machine

was destroyed by an accident on 1st June, 2016, and Nikhil received * 70,000 from Insurance Company.

Depreciation is 10% per annum. It is calculated on fixed instalment method. Nikhil closes its books every year

31st March. Open Accrued Interest Account Machinery Account and Interest Account in the books of Nikhil.