XYZ company purchased machine from Japan by 50,000 dhs , it also paid 7000 for insurance , 8000 for shipment , 6000 for Abu Dhabi custom, 3000 for installation , 2000 for the office boy salary. The expected life of the machine is 5 years and the expected salvage is 10,000 . salvage sold at 12,000. Required : using straight line method calculate ; 1- Total cost of the machine 2- Annual depreciation 3- Machine purchase entry
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.
Question 2
XYZ company purchased machine from Japan by 50,000 dhs , it also paid 7000 for insurance , 8000 for shipment , 6000 for Abu Dhabi custom, 3000 for installation , 2000 for the office boy salary. The expected life of the machine is 5 years and the expected salvage is 10,000 . salvage sold at 12,000. Required : using
1- Total cost of the machine
2- Annual
3- Machine purchase entry
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