Quote:
Originally Posted by seher bano
Depreciation (2012) Kindly somebody solve this question.....
Q. 9. The non current asset section of Aadil & Co. at December 31, 2005 is as under:-
Land Rs. 1,000,000
Office equipment Rs. 5,000,000
Less: accumulated depreciation 250,000 4,750,000
Machinery Rs. 600,000
Less: accumulated depreciation 120,000 480,000
Total non current asset 6,230,000
OTHER INFORMATION:
All assets were purchased on January 2, 2004
The firm depreciates all assets on a straight line basis with no residual value and with
the following lives:
Office equipment 40 years
Machinery 10 years
The following transactions occurred during 2006:
Apr. 01. A new additional equipment was purchased for Rs. 1,000,000 and
machinery at a cost of Rs. 50,000. All items were paid for in cash.
Jul. 15. Repairs of Rs. 5,000 were made for cash on machinery.
Sep. 30. Machinery with a cost of Rs. 100,000 and accumulated depreciation of
Rs. 20,000 (as of 31st December, 2005) was sold for Rs. 82,000 cash.
Dec. 31. Machinery with a cost of Rs. 50,000 and accumulated depreciation of Rs. 10,000
(as of 31st December, 2005) was traded in for new machinery. The firm received
a trade-in allowance of Rs. 32,000. The list price of the new machinery is
Rs. 85,000.
REQUIRED:
Make all the required Journal entries.
Show all necessary computations.
|
Journal entries Dr Cr
Apr 1:
Off: equipments 1000000 Dr
Cash 1000000 Cr
Machinery 50000 Dr
Cash 50000 Cr
Jul 15
Repairs exp:5000 Dr
Cash 5000 Cr
Sept 30
Cash 82000 Dr
Acc: Dep 20000 Dr
Machinery 100000 Cr
Profit(I/S) 2000 Cr
Dec 31
Machinery (new) 85000 Dr
Acc Dep: (working 1)15000 Dr
Loss in trade in (working 2) 3000 Dr
Machinery(old) 50000 Cr
Cash(working 3) 53000 Cr
Computation
Land Rs. 1,000,000(a)
Office equipment(working 4) 6,000,000
Less: accumulated depreciation(working 5) 400,000 = 5,600,000(b)
Machinery(w6) 585,000
Less: accumulated depreciation(w7) 145,000 = 440,000(c)
Total non current asset(a+b+c) 7,040,000
Workings:
W1
Acc: Dep @ 2005 add dep for year 2006
10000+5000=15000
W2
Old machinery less Acc: dep(w1)=net book value less trade in allowance = loss in trade
50000-15000=35000-32000=3000
W3
New machinery price less trade in allowance = cash paid
85000 – 32000 = 53000
W4
Old equipments + new equipments = office equipments
5000000+1000000=6000000
W5
Depreciate at straight line basis means divide equipments with their life
So 6000000/40 years= 150000 is depreciation charges for the year 2006
Means
The accumulated depreciation is
250000 till 2005
150000 of 2006
400000 is total acc: dep till 2006.
W6
old machinery 600000(a)
add: machine purchase on 1 April 50000(b)
less: machine sold on 30 September 100000(c)
less: machine sold on 31 December 50000(d)
add machine purchase on 31 December 85000(e)
total machinery (a+b-c-d+e) 585000
W7
Acc: dep for machine @ 2005 120000(a)
Less dep of asset sold on September 20000(b)
Less dep of asset sold on December 10000(c)
Acc: dep @ 2005 after sold assets(a-b-c) 90000(d)
Add: dep for the year 2006 (w8) 55000(e)
Total Acc: dep till 2006 (d+e) 145000
W8
old machinery 600000(a)
add: machine purchase on 1 April 50000(b)
less: machine sold on 30 September 100000(c)
less: machine sold on 31 December 50000(d)
available for dep of 2006 are (a+b-c-d) 500000
nw 500000/10years so 50000 plus 5000(w1) =55000
seniors check please..