Prepare machinery account from 1st April 2014 to 31st March 2018.
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.
Akshat enterprises purchased on 1st April 2014, a machine for 7,28,000 and spent Rs 22,000 on its installation. It purchased another machinery for Rs 2,50,000 on 1st October 2014. On 1st October 2016, the first machine sold for 4,50,000. It purchased another machinery on the same date for Rs 6,00,000.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images