Originally Posted by Rohail Khan

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..