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X Ltd purchased on first of October 2014 a machinery for 32,000 and spent 5000 on freight and transit insurance on 25 December 2014 and for this 20,000 on its direction the machinery was put to use on 1 January 2015 on July 1, 2016 it purchased another machine for 10,000 and on 10 July 2017 soul of the first machine purchased in 2015 for 28,000 on the same time date it purchased a machinery for 25,000 on first of July 2018 the second machinery purchased for 10,000 was sold of four 2000 depreciation was provided on the machinery at the rate of 10% on the original cost annually 31st of December in 2018 hours the company change the method of providing appreciation adopted the written down value method?
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X Ltd purchased on first of October 2014 a machinery for 32,000 and sp...
Calculation of Depreciation:

  • Machinery purchased on 1st October 2014: 32,000 + 5,000 (freight and transit insurance) = 37,000

  • Depreciation for 2014 (3 months): 3,700 (10% of 37,000)

  • Depreciation for 2015: 3,700

  • Depreciation for 2016: 3,700

  • Depreciation for 2017 (6 months): 1,850

  • Written down value as on 31st December 2017: 24,300

  • Sold on 10th July 2017 for 28,000, thus a profit of 3,700

  • Machinery purchased on 1st January 2015: 20,000

  • Depreciation for 2015: 2,000 (10% of 20,000)

  • Depreciation for 2016: 2,000

  • Depreciation for 2017: 2,000

  • Depreciation for 2018: 2,000

  • Written down value as on 31st December 2018: 12,000

  • Machinery purchased on 1st July 2016: 10,000

  • Depreciation for 2016 (6 months): 500 (10% of 10,000)

  • Depreciation for 2017: 1,000

  • Depreciation for 2018: 1,000

  • Written down value as on 31st December 2018: 7,500



Change in Depreciation Method:

  • The company changed the method of providing depreciation from straight line method to written down value method in 2018.

  • Under the straight line method, depreciation is charged at a fixed rate every year on the cost of the asset. This method is simple and easy to understand.

  • Under the written down value method, depreciation is charged at a fixed percentage every year on the written down value of the asset. This method is more complex but provides for a higher depreciation charge in the initial years of the asset's life.

  • By changing the depreciation method, the company can adjust its profits and reduce its tax liability.

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X Ltd purchased on first of October 2014 a machinery for 32,000 and spent 5000 on freight and transit insurance on 25 December 2014 and for this 20,000 on its direction the machinery was put to use on 1 January 2015 on July 1, 2016 it purchased another machine for 10,000 and on 10 July 2017 soul of the first machine purchased in 2015 for 28,000 on the same time date it purchased a machinery for 25,000 on first of July 2018 the second machinery purchased for 10,000 was sold of four 2000 depreciation was provided on the machinery at the rate of 10% on the original cost annually 31st of December in 2018 hours the company change the method of providing appreciation adopted the written down value method?
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X Ltd purchased on first of October 2014 a machinery for 32,000 and spent 5000 on freight and transit insurance on 25 December 2014 and for this 20,000 on its direction the machinery was put to use on 1 January 2015 on July 1, 2016 it purchased another machine for 10,000 and on 10 July 2017 soul of the first machine purchased in 2015 for 28,000 on the same time date it purchased a machinery for 25,000 on first of July 2018 the second machinery purchased for 10,000 was sold of four 2000 depreciation was provided on the machinery at the rate of 10% on the original cost annually 31st of December in 2018 hours the company change the method of providing appreciation adopted the written down value method? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about X Ltd purchased on first of October 2014 a machinery for 32,000 and spent 5000 on freight and transit insurance on 25 December 2014 and for this 20,000 on its direction the machinery was put to use on 1 January 2015 on July 1, 2016 it purchased another machine for 10,000 and on 10 July 2017 soul of the first machine purchased in 2015 for 28,000 on the same time date it purchased a machinery for 25,000 on first of July 2018 the second machinery purchased for 10,000 was sold of four 2000 depreciation was provided on the machinery at the rate of 10% on the original cost annually 31st of December in 2018 hours the company change the method of providing appreciation adopted the written down value method? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for X Ltd purchased on first of October 2014 a machinery for 32,000 and spent 5000 on freight and transit insurance on 25 December 2014 and for this 20,000 on its direction the machinery was put to use on 1 January 2015 on July 1, 2016 it purchased another machine for 10,000 and on 10 July 2017 soul of the first machine purchased in 2015 for 28,000 on the same time date it purchased a machinery for 25,000 on first of July 2018 the second machinery purchased for 10,000 was sold of four 2000 depreciation was provided on the machinery at the rate of 10% on the original cost annually 31st of December in 2018 hours the company change the method of providing appreciation adopted the written down value method?.
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