M/s Pankaj Arora bought machinery for ₹ 22,280 and spent 5,720 for its erection The estimated life of the machinery was 9 years and would keep a balance of 2800 after the period. Show the Machinery A/c for the first 4 years (Answer - Annual depreciation - 2,800, balance of equipment account at the end of the fourth year - 16,800) 11:22 AM ✓
M/s Pankaj Arora bought machinery for ₹ 22,280 and spent 5,720 for its erection The estimated life of the machinery was 9 years and would keep a balance of 2800 after the period. Show the Machinery A/c for the first 4 years (Answer - Annual depreciation - 2,800, balance of equipment account at the end of the fourth year - 16,800) 11:22 AM ✓
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Transcribed Image Text:M/s Pankaj Arora bought machinery for 22,280 and spent
5,720 for its erection The estimated life of the machinery was 9
years and would keep a balance of 2800 after the period. Show
the Machinery A/c for the first 4 years
(Answer - Annual depreciation - 2,800, balance of equipment
account at the end of the fourth year - 16,800)
11:22 AM
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