X purchased a machinery on 1st January 2017 fort. 4,80,000 and spent t 20,000 on its installation. On July 1, 2017 another machinery costing t 2,00,000 was purchased. On 1st July, 2018 the machinery purchased on 1st January, 2017 having become scrapped and was sold for t 2,90,000 and on the same date fresh machinery was purchised for t 5,00,000. Depreciation is provided annually on 31st December at the rate of 10% p.a. on written down value. Prepare Machinery account for the years 2017 and 2018

X purchased a machinery on 1st January 2017 fort. 4,80,000 and spent t 20,000 on its installation. On July 1, 2017 another machinery costing t 2,00,000 was purchased. On 1st July, 2018 the machinery purchased on 1st January, 2017 having become scrapped and was sold for t 2,90,000 and on the same date fresh machinery was purchised for t 5,00,000. Depreciation is provided annually on 31st December at the rate of 10% p.a. on written down value. Prepare Machinery account for the years 2017 and 2018

Name: X purchased a machinery on 1st January 2017 fort. 4,80,000 and spent
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Description: X purchased a machinery on 1st January 2017 fort. 4,80,000 and spent t 20,000 on its installation. On July 1, 2017another machinery costing t 2,00,000 was purchased. On 1st July, 2018 the machinery purchased on 1st January,2017 having become scrappe

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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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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Question

X purchased a machinery on 1st January 2017 fort. 4,80,000 and spent t 20,000 on its installation. On July 1, 2017
another machinery costing t 2,00,000 was purchased. On 1st July, 2018 the machinery purchased on 1st January,
2017 having become scrapped and was sold for t 2,90,000 and on the same date fresh machinery was purchised
for t 5,00,000. Depreciation is provided annually on 31st December at the rate of 10% p.a. on written down value.
Prepare Machinery account for the years 2017 and 2018

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