Question 4: The following details regarding Machines are provided: Machine Date of purchase Cost Date of sale Cash Proceeds $ $ 05/04/2017 1,000,000 02/06/2020 450,000 01/01/2019 2,000,000 X Y The policy of the company is to depreciate its PP&E at 10% on cost. Depreciation is charged in full in the year of purcha disposal. 4 Required: For year ended 31st December 2020 prepare: Machinery account Accumulated depreciation account o Machinery disposal a/c SPOL Extract SFP Extract Question 5: A machine was purchased on 2nd July 2016 for $1,200,000. It was traded in for new one whose price was $1,000,000 on 2nd Ju exchange. The policy of the company is to charge depreciation for its PP&E ct 10% on cost per annum. Depreciation is chargec depreciation is charged in the year of disposal.

Question 4: The following details regarding Machines are provided: Machine Date of purchase Cost Date of sale Cash Proceeds $ $ 05/04/2017 1,000,000 02/06/2020 450,000 01/01/2019 2,000,000 X Y The policy of the company is to depreciate its PP&E at 10% on cost. Depreciation is charged in full in the year of purcha disposal. 4 Required: For year ended 31st December 2020 prepare: Machinery account Accumulated depreciation account o Machinery disposal a/c SPOL Extract SFP Extract Question 5: A machine was purchased on 2nd July 2016 for $1,200,000. It was traded in for new one whose price was $1,000,000 on 2nd Ju exchange. The policy of the company is to charge depreciation for its PP&E ct 10% on cost per annum. Depreciation is chargec depreciation is charged in the year of disposal.

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Description: COLLEGEQuestion 4:The following details regarding Machines are provided:Machine Date of purchase Cost Date of sale Cash Proceeds$1,000,000 02/06/2020 450,000XXY05/04/201701/01/2019 2,000,000The policy of the company is to depreciate its PP&E at 10%

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.

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Step 1: Meaning of Depreciation

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Step 2: Machinery Account

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Step 3: Accumulated Depreciation Account

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Step 4: Machinery Disposal Account

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Step 5: Statement of Profit and loss

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Step 6: Extract of Financial Position

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