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#1
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Let`solve CE-2016 A&A paper
A.O.A!
kindly check solution of this question (CE-2016 A&A paper I Q NO 4(A)) HERE IS SOLUTION (a)schedule Working To find depreciation rate Cost (c) =85000 Residual value (s) =10000 Useful life (n) =4years Rate of depreciation (r) =? Formula: Annual depreciation=cost- salvage value =85000-10000 =18750 Estimated life 4 Depreciation rate =annual depreciation×100=18750×100= 25% Depreciable value 75000 (Depreciable value=cost- salvage value=85000-10000=75000) As double declining balance depreciation method so Depreciation Rate = Accelerator × Straight Line Rate =2 × 25% =50% Calculation of depreciation Depreciation = Depreciation Rate × Book Value of Asset year Net book value, Double-declining balance Acc dep NBV, beginning of year depreciation computed end of year as 2 × SL rate × beginning NBV 1 85,000 42,500 42,500 42,500 2 42,500 21,250 63,750 21,250 3 21,250 10,625 74,375 10,625 4 10,625 625 625 10,000 salvage value Total 75,000 75,000 (b) Balance sheet at 31 Dec 2015 Hydri construction co. Balance sheet As on 31st December 2015 Liabilities Rs. Assets Rs. Fixed Assets: Excavator: 85000 -depreciation 42500 42500 |
#2
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(C ):ENTRIES
1 jan 2015 Excavator a/c 85,000 Bank a/c 85,000 Being asset is acquired 31Dec,2015 Depreciation a/c 42,500 Excavator a/c 42,500 Being depreciation charged Profit and loss a/c 42,500 Depreciation a/c 42,500 Being depreciation a/c transferred to Profit and loss a/c 31Dec,2016 Depreciation a/c 21,250 Excavator a/c 21,250 Being depreciation charged Profit and loss a/c 21,250 Depreciation a/c 21,250 Being depreciation a/c transferred to Profit and loss a/c 31Dec,2017 Depreciation a/c 10,625 Excavator a/c 10,625 Being depreciation charged Profit and loss a/c 10,625 Depreciation a/c 10,625 Being depreciation a/c transferred to Profit and loss a/c 31Dec,2018 Depreciation a/c 625 Excavator a/c 625 Being depreciation charged Profit and loss a/c 625 Depreciation a/c 625 Being depreciation a/c transferred to Profit and loss a/c Bank a/c 10000 Excavator a/c 10000 Being scrap of asset sold |
The Following User Says Thank You to sandalali For This Useful Post: | ||
nawepukhtoon (Thursday, March 10, 2016) |
#3
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A. You have done extra working.
Try to save time by using the following formula: Depreciation rate = ¼ x 2 = 50% Secondly, Your schedule is not properly presented, however calculations are correct. B. Good, correct answer. However, You are supposed to write the Description ‘Accumulated Depreciation’ instead of Depreciation C. The entries are correct. However, you are supposed to credit Accumulated Depreciation instead of Asset. Comments: Good effort but you need to work with smartness and proper presentation. |
The Following User Says Thank You to Zubair Gilgiti For This Useful Post: | ||
sandalali (Sunday, March 13, 2016) |
#4
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First of all thank you very much for sparing your precious time to check this solution.
A- I prepared it in organized form on a MS office page with proper table insertion but during copy pasting something went wrong even after posting here I was unable to take its proper understanding anyways hats off to you that you still manage to read hahahaha. But thank you thank you so much. Ya you are right that it should be like Depreciation rate = ¼ x 2 = 50% actually I try to be sophisticated and presentable with proper formulas (even though I failed badly later) anyways yes you are right that i should work smartly and save time n next time I will do the same. C-When depreciation is charged In B.Com books entry is like (Accounting by M Arif & Sohail Afzal) Depreciation a/c …………..Dr Asset a/c………………….Cr In M.com entry is like Depreciation a/c …………….Dr Accumulated depreciation …..Cr At the disposal of asset Accumulated depreciation …..Dr Asset a/c ……………………Cr Any ways next time I will follow latter. |
#5
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Smartness saves your time in exam, therefore, you should practice the fastest way to solve. Never depends on books of B.Com or M.Com for any accounting treatment. Always check the relevant International Accounting Standard in case of confusion because IAS is the supreme text. M Arif or Sohail Afzal etc books contain some obsolete material as well because i have seen it while teaching to my B.Com students.
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#6
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The depreciation for the last year is recorded as 625. Please explain, why?
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#7
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That is the only amount leftover to depreciate for the last year.
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#8
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Quote:
What I would have done is as follows: Depreciating the asset by 5312.5, and then selling for 10000 and reporting a gain of 4687.5. Please explain if the treatment applied by me is correct or not. Thanks Sent from my INFINIX-X551 using Tapatalk |
#9
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Quote:
You can not depreciate an asset more than depreciable amount e.g (Cost - Residual Value) However, under both options Net impact on profit will remain same. |
The Following User Says Thank You to Zubair Gilgiti For This Useful Post: | ||
ammadbeaconite (Sunday, April 03, 2016) |
#10
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Aspirants please solve further..
Accounting aspirants please solve other questions as well from2016 paper..
Please reconcile these also... Q2..Net Income Rs.2410 Balance sheet Re.18610 Retained Earning 1910 Q3b..Adjusting entries total 7 if im not wrong?? Share entry for salaries and rent revenue... Q4b..ratios in order 2.26 1.01 56days 4.02 1.06 44.37% 7.92% 19.47% Q5a..net income. .Rs.755,500. Units manufactd 14300 Unit cost of calculators manufacture 340 Gp/unit..122 Inc/unit...53.20 Ratio of gp to sales..0.26:1 Income to sales %...11.38% Please correct me where I'm wrong n share your ans to all other questions as well as it wd b v helpful for all of us... I want to chk mine |
Tags |
accountant, awesum farhan, raz, zubair gilgit |
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