ABC & Co imported machine from Italy at Rs.1256,000, Co. paid freight charges Rs.75,000 and insurance in transit Rs.25000. Co also paid import duty Rs.235,000 and transportation charges Rs.5000. Foundation and installation cost incurred Rs. 125,000. Test run cost incurred Rs.15,000. Estimated life of the machine is 20 years and expected scrap value is Rs.250,000. Required: 1) Compute total cost of the machine 2) Compute depreciation expense under following methods for three years: • Straight line method • Diminishing balance method( rate 20% ) • Double declining balance method

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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ABC & Co imported machine from Italy at Rs.1256,000, Co. paid freight charges Rs.75,000 and insurance in transit Rs.25000. Co also paid import duty Rs.235,000 and transportation charges Rs.5000. Foundation and installation cost incurred Rs. 125,000. Test run cost incurred Rs.15,000.
Estimated life of the machine is 20 years and expected scrap value is Rs.250,000.

Required:
1) Compute total cost of the machine
2) Compute depreciation expense under following methods for three years:
Straight line method
• Diminishing balance method( rate 20% )
• Double declining balance method

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