M/s. Green Channel purchased a second-hand machine on 1st January, 2015 for 1,60,000. Overhauling and Erection charges amounted to $ 40,000. Another machine was purchased for $ 80,000 on 1st July, 2015. On 1st July, 2017, the machine installed on 1st January, 2015 was sold for $ 1,00,000. Another machine amounted to 30,000 was purchased and was installed on 30th September, 2017. Under the existing practice the company provides

M/s. Green Channel purchased a second-hand machine on 1st January, 2015 for 1,60,000. Overhauling and Erection charges amounted to $ 40,000. Another machine was purchased for $ 80,000 on 1st July, 2015. On 1st July, 2017, the machine installed on 1st January, 2015 was sold for $ 1,00,000. Another machine amounted to 30,000 was purchased and was installed on 30th September, 2017. Under the existing practice the company provides

Name: M/s. Green Channel purchased a second-hand machine on 1stJanuary, 201
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Description: M/s. Green Channel purchased a second-hand machine on 1stJanuary, 2015 for 1,60,000. Overhauling andErection charges amounted to $ 40,000. Another machinewas purchased for $ 80,000 on 1st July, 2015.On 1st July, 2017, the machine installed on 1st Ja

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

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.

Topic Video

Question

M/s. Green Channel purchased a second-hand machine on 1st
January, 2015 for 1,60,000. Overhauling and
Erection charges amounted to $ 40,000. Another machine
was purchased for $ 80,000 on 1st July, 2015.
On 1st July, 2017, the machine installed on 1st January, 2015
was sold for $ 1,00,000.
Another machine amounted to 30,000 was purchased and
was installed on 30th September, 2017.
Under the existing practice the company provides
depreciation @ 10% p.a. on original cost. However, from the
Year 2018 it decided to adopt WDV method and to charge
depreciation 15% p.a. You are required to prepare
Machinery account for the years 2015 to 2018.

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