On January 02, 2009, Atlas Business bought a machine for Rs. 50, 000, on credit terms of 2/10, n/30. The payment was paid within the discount period. Freight in charges was Rs.4, 000 and installation and testing charges were Rs. 2, 000. It was estimated that the useful life will be 5 years and the residual value will be Rs. 7, 000. Full year convention was used in the year of purchase. Instructions: - Compute the cost price of the machine and give the journal entry to record the acquisition of machine. Use the methods to prepare the depreciation schedule Straight Line Method Straight Line Method for the years 2009 and 2010
On January 02, 2009, Atlas Business bought a machine for Rs. 50, 000, on credit terms of 2/10, n/30. The payment was paid within the discount period. Freight in charges was Rs.4, 000 and installation and testing charges were Rs. 2, 000. It was estimated that the useful life will be 5 years and the residual value will be Rs. 7, 000. Full year convention was used in the year of purchase. Instructions: - Compute the cost price of the machine and give the journal entry to record the acquisition of machine. Use the methods to prepare the depreciation schedule Straight Line Method Straight Line Method for the years 2009 and 2010
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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: On January 02, 2009, Atlas Business bought a machine for Rs. 50, 000, on credit terms of 2/10, n/30. The payment was paid within the discount period. Freight in charges was Rs.4, 000 and installation and testing charges were Rs. 2, 000. It was estimated that the useful life will be 5 years and the residual value will be Rs. 7, 000. Full year convention was used in the year of purchase.
Instructions: -
- Compute the cost price of the machine and give the
journal entry to record the acquisition of machine.
- Use the methods to prepare the
depreciation schedule
Straight Line Method
Straight Line Method for the years 2009 and 2010
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