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Reliance Ltd. purchased a second hand machine for ₹ 56,000 on October 01, 2011 and spent ₹ 28,000 on its overhaul and installation before putting it to operation. It is expected that the machine can be sold for ₹ 6,000 at the end of its useful life of 15 years. Moreover an estimated cost of ₹ 1,000 is expected to be incurred to recover the salvage value of ₹ 6,000.?
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Reliance Ltd. purchased a second hand machine for ₹ 56,000 on October ...
Introduction:
Reliance Ltd. purchased a second-hand machine for ₹ 56,000 on October 01, 2011. The company then spent ₹ 28,000 on overhauling and installation before putting it into operation. The machine is expected to have a useful life of 15 years and can be sold for ₹ 6,000 at the end of its useful life. Additionally, an estimated cost of ₹ 1,000 is expected to be incurred to recover the salvage value of ₹ 6,000.
Cost of the Machine:
- Purchase cost: ₹ 56,000
- Overhauling and installation cost: ₹ 28,000
- Total cost: ₹ 84,000 (₹ 56,000 + ₹ 28,000)
Useful Life and Salvage Value:
- Useful life: 15 years
- Salvage value: ₹ 6,000
Depreciation Calculation:
Depreciation is the allocation of the cost of an asset over its useful life.
Straight Line Method:
- Depreciation per year = (Cost - Salvage value) / Useful life
- Depreciation per year = (₹ 84,000 - ₹ 6,000) / 15
- Depreciation per year = ₹ 78,000 / 15
- Depreciation per year = ₹ 5,200
Depreciation Schedule:
Year 1: ₹ 5,200
Year 2: ₹ 5,200
Year 3: ₹ 5,200
Year 4: ₹ 5,200
Year 5: ₹ 5,200
Year 6: ₹ 5,200
Year 7: ₹ 5,200
Year 8: ₹ 5,200
Year 9: ₹ 5,200
Year 10: ₹ 5,200
Year 11: ₹ 5,200
Year 12: ₹ 5,200
Year 13: ₹ 5,200
Year 14: ₹ 5,200
Year 15: ₹ 5,200
Recovering Salvage Value:
To recover the salvage value of ₹ 6,000, an estimated cost of ₹ 1,000 is expected to be incurred.
Net Book Value:
Net book value is the value of an asset after deducting accumulated depreciation.
Net Book Value Calculation:
Net book value = Cost - Accumulated depreciation
Net Book Value Schedule:
Year 1: ₹ 78,000 (₹ 84,000 - ₹ 5,200)
Year 2: ₹ 72,800 (₹ 78,000 - ₹ 5,200)
Year 3: ₹ 67,600 (₹ 72,800 - ₹ 5,200)
Year 4: ₹ 62,400 (₹ 67,600 - ₹ 5,200)
Year 5: ₹ 57,200 (₹ 62,400 - ₹ 5,200)
Year 6: ₹ 52,000 (₹ 57,200 - ₹ 5,200)
Year 7: ₹ 46,800 (
Reliance Ltd. purchased a second-hand machine for ₹ 56,000 on October 01, 2011. The company then spent ₹ 28,000 on overhauling and installation before putting it into operation. The machine is expected to have a useful life of 15 years and can be sold for ₹ 6,000 at the end of its useful life. Additionally, an estimated cost of ₹ 1,000 is expected to be incurred to recover the salvage value of ₹ 6,000.
Cost of the Machine:
- Purchase cost: ₹ 56,000
- Overhauling and installation cost: ₹ 28,000
- Total cost: ₹ 84,000 (₹ 56,000 + ₹ 28,000)
Useful Life and Salvage Value:
- Useful life: 15 years
- Salvage value: ₹ 6,000
Depreciation Calculation:
Depreciation is the allocation of the cost of an asset over its useful life.
Straight Line Method:
- Depreciation per year = (Cost - Salvage value) / Useful life
- Depreciation per year = (₹ 84,000 - ₹ 6,000) / 15
- Depreciation per year = ₹ 78,000 / 15
- Depreciation per year = ₹ 5,200
Depreciation Schedule:
Year 1: ₹ 5,200
Year 2: ₹ 5,200
Year 3: ₹ 5,200
Year 4: ₹ 5,200
Year 5: ₹ 5,200
Year 6: ₹ 5,200
Year 7: ₹ 5,200
Year 8: ₹ 5,200
Year 9: ₹ 5,200
Year 10: ₹ 5,200
Year 11: ₹ 5,200
Year 12: ₹ 5,200
Year 13: ₹ 5,200
Year 14: ₹ 5,200
Year 15: ₹ 5,200
Recovering Salvage Value:
To recover the salvage value of ₹ 6,000, an estimated cost of ₹ 1,000 is expected to be incurred.
Net Book Value:
Net book value is the value of an asset after deducting accumulated depreciation.
Net Book Value Calculation:
Net book value = Cost - Accumulated depreciation
Net Book Value Schedule:
Year 1: ₹ 78,000 (₹ 84,000 - ₹ 5,200)
Year 2: ₹ 72,800 (₹ 78,000 - ₹ 5,200)
Year 3: ₹ 67,600 (₹ 72,800 - ₹ 5,200)
Year 4: ₹ 62,400 (₹ 67,600 - ₹ 5,200)
Year 5: ₹ 57,200 (₹ 62,400 - ₹ 5,200)
Year 6: ₹ 52,000 (₹ 57,200 - ₹ 5,200)
Year 7: ₹ 46,800 (
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Reliance Ltd. purchased a second hand machine for ₹ 56,000 on October ...
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Reliance Ltd. purchased a second hand machine for ₹ 56,000 on October 01, 2011 and spent ₹ 28,000 on its overhaul and installation before putting it to operation. It is expected that the machine can be sold for ₹ 6,000 at the end of its useful life of 15 years. Moreover an estimated cost of ₹ 1,000 is expected to be incurred to recover the salvage value of ₹ 6,000.?
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Reliance Ltd. purchased a second hand machine for ₹ 56,000 on October 01, 2011 and spent ₹ 28,000 on its overhaul and installation before putting it to operation. It is expected that the machine can be sold for ₹ 6,000 at the end of its useful life of 15 years. Moreover an estimated cost of ₹ 1,000 is expected to be incurred to recover the salvage value of ₹ 6,000.? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Reliance Ltd. purchased a second hand machine for ₹ 56,000 on October 01, 2011 and spent ₹ 28,000 on its overhaul and installation before putting it to operation. It is expected that the machine can be sold for ₹ 6,000 at the end of its useful life of 15 years. Moreover an estimated cost of ₹ 1,000 is expected to be incurred to recover the salvage value of ₹ 6,000.? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Reliance Ltd. purchased a second hand machine for ₹ 56,000 on October 01, 2011 and spent ₹ 28,000 on its overhaul and installation before putting it to operation. It is expected that the machine can be sold for ₹ 6,000 at the end of its useful life of 15 years. Moreover an estimated cost of ₹ 1,000 is expected to be incurred to recover the salvage value of ₹ 6,000.?.
Reliance Ltd. purchased a second hand machine for ₹ 56,000 on October 01, 2011 and spent ₹ 28,000 on its overhaul and installation before putting it to operation. It is expected that the machine can be sold for ₹ 6,000 at the end of its useful life of 15 years. Moreover an estimated cost of ₹ 1,000 is expected to be incurred to recover the salvage value of ₹ 6,000.? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Reliance Ltd. purchased a second hand machine for ₹ 56,000 on October 01, 2011 and spent ₹ 28,000 on its overhaul and installation before putting it to operation. It is expected that the machine can be sold for ₹ 6,000 at the end of its useful life of 15 years. Moreover an estimated cost of ₹ 1,000 is expected to be incurred to recover the salvage value of ₹ 6,000.? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Reliance Ltd. purchased a second hand machine for ₹ 56,000 on October 01, 2011 and spent ₹ 28,000 on its overhaul and installation before putting it to operation. It is expected that the machine can be sold for ₹ 6,000 at the end of its useful life of 15 years. Moreover an estimated cost of ₹ 1,000 is expected to be incurred to recover the salvage value of ₹ 6,000.?.
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Reliance Ltd. purchased a second hand machine for ₹ 56,000 on October 01, 2011 and spent ₹ 28,000 on its overhaul and installation before putting it to operation. It is expected that the machine can be sold for ₹ 6,000 at the end of its useful life of 15 years. Moreover an estimated cost of ₹ 1,000 is expected to be incurred to recover the salvage value of ₹ 6,000.?, a detailed solution for Reliance Ltd. purchased a second hand machine for ₹ 56,000 on October 01, 2011 and spent ₹ 28,000 on its overhaul and installation before putting it to operation. It is expected that the machine can be sold for ₹ 6,000 at the end of its useful life of 15 years. Moreover an estimated cost of ₹ 1,000 is expected to be incurred to recover the salvage value of ₹ 6,000.? has been provided alongside types of Reliance Ltd. purchased a second hand machine for ₹ 56,000 on October 01, 2011 and spent ₹ 28,000 on its overhaul and installation before putting it to operation. It is expected that the machine can be sold for ₹ 6,000 at the end of its useful life of 15 years. Moreover an estimated cost of ₹ 1,000 is expected to be incurred to recover the salvage value of ₹ 6,000.? theory, EduRev gives you an
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