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On April 5,2005,Bajrang marble purchased a machine for Rs. 2,80,000 and spent Rs. 10,000 on its carriage and Rs.10,000 on its installation.It is estimated that its working life is 10years and after 10 years its scrap value will be Rs.20,000. Prepare Machine A/c and Depreciation A/c for first four years by providing depreciation on straight line method.Account are closed on march 31 every year.?
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On April 5,2005,Bajrang marble purchased a machine for Rs. 2,80,000 an...
Machine Account:
Machine account is a nominal account which records the cost of the machine purchased by the business. It is a part of the fixed assets of the business and is shown on the asset side of the balance sheet. The machine account is debited with the cost of the machine and any additional expenses incurred for its carriage and installation.
Depreciation Account:
Depreciation account is a nominal account which records the depreciation expense of the machine over its useful life. It is a part of the indirect expenses of the business and is shown on the debit side of the profit and loss account. The depreciation account is debited with the annual depreciation expense.
Straight Line Method of Depreciation:
Under the straight line method of depreciation, the cost of the machine is allocated equally over its useful life. The annual depreciation expense is calculated by dividing the cost of the machine minus its scrap value by the number of years of its useful life.
Calculation of Depreciation:
Cost of machine = Rs. 2,80,000
Carriage expenses = Rs. 10,000
Installation expenses = Rs. 10,000
Useful life of machine = 10 years
Scrap value of machine = Rs. 20,000
Depreciation expense per year = (Cost of machine - Scrap value) / Useful life
= (2,80,000 + 10,000 + 10,000 - 20,000) / 10
= Rs. 28,000
Year 1:
Machine Account:
Debit:
Machine - Rs. 2,80,000
Carriage - Rs. 10,000
Installation - Rs. 10,000
Total - Rs. 3,00,000
Depreciation Account:
Debit:
Depreciation Expense - Rs. 28,000
Year 2:
Machine Account:
No entry in the machine account as it is already recorded in the first year.
Depreciation Account:
Debit:
Depreciation Expense - Rs. 28,000
Year 3:
Machine Account:
No entry in the machine account as it is already recorded in the first year.
Depreciation Account:
Debit:
Depreciation Expense - Rs. 28,000
Year 4:
Machine Account:
No entry in the machine account as it is already recorded in the first year.
Depreciation Account:
Debit:
Depreciation Expense - Rs. 28,000
Summary:
By following the straight line method of depreciation, the annual depreciation expense of Rs. 28,000 is recorded in the depreciation account for the first four years. The machine account does not have any additional entries after the initial purchase and installation. The machine account reflects the total cost of the machine, including the carriage and installation expenses. The depreciation account reflects the annual depreciation expense, which is calculated based on the cost of the machine minus its scrap value divided by the useful life of the machine.
Machine account is a nominal account which records the cost of the machine purchased by the business. It is a part of the fixed assets of the business and is shown on the asset side of the balance sheet. The machine account is debited with the cost of the machine and any additional expenses incurred for its carriage and installation.
Depreciation Account:
Depreciation account is a nominal account which records the depreciation expense of the machine over its useful life. It is a part of the indirect expenses of the business and is shown on the debit side of the profit and loss account. The depreciation account is debited with the annual depreciation expense.
Straight Line Method of Depreciation:
Under the straight line method of depreciation, the cost of the machine is allocated equally over its useful life. The annual depreciation expense is calculated by dividing the cost of the machine minus its scrap value by the number of years of its useful life.
Calculation of Depreciation:
Cost of machine = Rs. 2,80,000
Carriage expenses = Rs. 10,000
Installation expenses = Rs. 10,000
Useful life of machine = 10 years
Scrap value of machine = Rs. 20,000
Depreciation expense per year = (Cost of machine - Scrap value) / Useful life
= (2,80,000 + 10,000 + 10,000 - 20,000) / 10
= Rs. 28,000
Year 1:
Machine Account:
Debit:
Machine - Rs. 2,80,000
Carriage - Rs. 10,000
Installation - Rs. 10,000
Total - Rs. 3,00,000
Depreciation Account:
Debit:
Depreciation Expense - Rs. 28,000
Year 2:
Machine Account:
No entry in the machine account as it is already recorded in the first year.
Depreciation Account:
Debit:
Depreciation Expense - Rs. 28,000
Year 3:
Machine Account:
No entry in the machine account as it is already recorded in the first year.
Depreciation Account:
Debit:
Depreciation Expense - Rs. 28,000
Year 4:
Machine Account:
No entry in the machine account as it is already recorded in the first year.
Depreciation Account:
Debit:
Depreciation Expense - Rs. 28,000
Summary:
By following the straight line method of depreciation, the annual depreciation expense of Rs. 28,000 is recorded in the depreciation account for the first four years. The machine account does not have any additional entries after the initial purchase and installation. The machine account reflects the total cost of the machine, including the carriage and installation expenses. The depreciation account reflects the annual depreciation expense, which is calculated based on the cost of the machine minus its scrap value divided by the useful life of the machine.
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On April 5,2005,Bajrang marble purchased a machine for Rs. 2,80,000 an...
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On April 5,2005,Bajrang marble purchased a machine for Rs. 2,80,000 and spent Rs. 10,000 on its carriage and Rs.10,000 on its installation.It is estimated that its working life is 10years and after 10 years its scrap value will be Rs.20,000. Prepare Machine A/c and Depreciation A/c for first four years by providing depreciation on straight line method.Account are closed on march 31 every year.?
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On April 5,2005,Bajrang marble purchased a machine for Rs. 2,80,000 and spent Rs. 10,000 on its carriage and Rs.10,000 on its installation.It is estimated that its working life is 10years and after 10 years its scrap value will be Rs.20,000. Prepare Machine A/c and Depreciation A/c for first four years by providing depreciation on straight line method.Account are closed on march 31 every year.? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about On April 5,2005,Bajrang marble purchased a machine for Rs. 2,80,000 and spent Rs. 10,000 on its carriage and Rs.10,000 on its installation.It is estimated that its working life is 10years and after 10 years its scrap value will be Rs.20,000. Prepare Machine A/c and Depreciation A/c for first four years by providing depreciation on straight line method.Account are closed on march 31 every year.? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for On April 5,2005,Bajrang marble purchased a machine for Rs. 2,80,000 and spent Rs. 10,000 on its carriage and Rs.10,000 on its installation.It is estimated that its working life is 10years and after 10 years its scrap value will be Rs.20,000. Prepare Machine A/c and Depreciation A/c for first four years by providing depreciation on straight line method.Account are closed on march 31 every year.?.
On April 5,2005,Bajrang marble purchased a machine for Rs. 2,80,000 and spent Rs. 10,000 on its carriage and Rs.10,000 on its installation.It is estimated that its working life is 10years and after 10 years its scrap value will be Rs.20,000. Prepare Machine A/c and Depreciation A/c for first four years by providing depreciation on straight line method.Account are closed on march 31 every year.? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about On April 5,2005,Bajrang marble purchased a machine for Rs. 2,80,000 and spent Rs. 10,000 on its carriage and Rs.10,000 on its installation.It is estimated that its working life is 10years and after 10 years its scrap value will be Rs.20,000. Prepare Machine A/c and Depreciation A/c for first four years by providing depreciation on straight line method.Account are closed on march 31 every year.? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for On April 5,2005,Bajrang marble purchased a machine for Rs. 2,80,000 and spent Rs. 10,000 on its carriage and Rs.10,000 on its installation.It is estimated that its working life is 10years and after 10 years its scrap value will be Rs.20,000. Prepare Machine A/c and Depreciation A/c for first four years by providing depreciation on straight line method.Account are closed on march 31 every year.?.
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On April 5,2005,Bajrang marble purchased a machine for Rs. 2,80,000 and spent Rs. 10,000 on its carriage and Rs.10,000 on its installation.It is estimated that its working life is 10years and after 10 years its scrap value will be Rs.20,000. Prepare Machine A/c and Depreciation A/c for first four years by providing depreciation on straight line method.Account are closed on march 31 every year.?, a detailed solution for On April 5,2005,Bajrang marble purchased a machine for Rs. 2,80,000 and spent Rs. 10,000 on its carriage and Rs.10,000 on its installation.It is estimated that its working life is 10years and after 10 years its scrap value will be Rs.20,000. Prepare Machine A/c and Depreciation A/c for first four years by providing depreciation on straight line method.Account are closed on march 31 every year.? has been provided alongside types of On April 5,2005,Bajrang marble purchased a machine for Rs. 2,80,000 and spent Rs. 10,000 on its carriage and Rs.10,000 on its installation.It is estimated that its working life is 10years and after 10 years its scrap value will be Rs.20,000. Prepare Machine A/c and Depreciation A/c for first four years by providing depreciation on straight line method.Account are closed on march 31 every year.? theory, EduRev gives you an
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