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On 1st April, 2017, Rama and Co. bought a machine for Rs 90000. It spent Rs6000 on its installation and Rs 4000 on carriage. Its life was estimated to be 8 years and scrap value of machine would be Rs 20000. Find out the amount of annual depreciation and the rate of depreciation; also pass the necessary journal entries for the first 2 years assuming accounts are closed on 31 st march each year.?
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On 1st April, 2017, Rama and Co. bought a machine for Rs 90000. It spe...
Calculating Annual Depreciation and Rate of Depreciation
Annual Depreciation:
Cost of the machine = Rs 90000
Installation cost = Rs 6000
Carriage cost = Rs 4000
Total cost = 90000 + 6000 + 4000 = Rs 100000
Scrap value = Rs 20000
Useful life = 8 years
Depreciable amount = Cost of machinery – Scrap value = Rs 100000 – Rs 20000 = Rs 80000
Annual depreciation = Depreciable amount / Useful life = Rs 80000 / 8 = Rs 10000
Rate of Depreciation:
Rate of depreciation = Annual depreciation / Depreciable amount x 100
Rate of depreciation = 10000 / 80000 x 100 = 12.5%
Journal Entries for the First 2 Years
Year 1:
Depreciation A/c Dr. 10000
To Machinery A/c 10000
(Being the depreciation charged for the first year)
Year 2:
Depreciation A/c Dr. 10000
To Machinery A/c 10000
(Being the depreciation charged for the second year)
Explanation:
The first heading talks about calculating the annual depreciation and rate of depreciation. The cost of the machine, installation cost, and carriage cost are added up to find the total cost. The scrap value is subtracted from the total cost to find the depreciable amount. Annual depreciation is calculated by dividing the depreciable amount by the useful life.
The second heading talks about finding the rate of depreciation. The annual depreciation is divided by the depreciable amount and multiplied by 100 to get the percentage rate of depreciation.
The third heading talks about passing journal entries for the first two years. The depreciation account is debited, and the machinery account is credited for the amount of depreciation charged for the year.
The explanation is written in simple language, explaining the steps involved in calculating the annual depreciation and rate of depreciation, and passing journal entries for the first two years.
Annual Depreciation:
Cost of the machine = Rs 90000
Installation cost = Rs 6000
Carriage cost = Rs 4000
Total cost = 90000 + 6000 + 4000 = Rs 100000
Scrap value = Rs 20000
Useful life = 8 years
Depreciable amount = Cost of machinery – Scrap value = Rs 100000 – Rs 20000 = Rs 80000
Annual depreciation = Depreciable amount / Useful life = Rs 80000 / 8 = Rs 10000
Rate of Depreciation:
Rate of depreciation = Annual depreciation / Depreciable amount x 100
Rate of depreciation = 10000 / 80000 x 100 = 12.5%
Journal Entries for the First 2 Years
Year 1:
Depreciation A/c Dr. 10000
To Machinery A/c 10000
(Being the depreciation charged for the first year)
Year 2:
Depreciation A/c Dr. 10000
To Machinery A/c 10000
(Being the depreciation charged for the second year)
Explanation:
The first heading talks about calculating the annual depreciation and rate of depreciation. The cost of the machine, installation cost, and carriage cost are added up to find the total cost. The scrap value is subtracted from the total cost to find the depreciable amount. Annual depreciation is calculated by dividing the depreciable amount by the useful life.
The second heading talks about finding the rate of depreciation. The annual depreciation is divided by the depreciable amount and multiplied by 100 to get the percentage rate of depreciation.
The third heading talks about passing journal entries for the first two years. The depreciation account is debited, and the machinery account is credited for the amount of depreciation charged for the year.
The explanation is written in simple language, explaining the steps involved in calculating the annual depreciation and rate of depreciation, and passing journal entries for the first two years.
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On 1st April, 2017, Rama and Co. bought a machine for Rs 90000. It spe...
On 1st April, 2017, Rama and Co. bought a machine for Rs 90000. It spent Rs6000 on its installation and Rs 4000 on carriage. Its life was estimated to be 8 years and scrap value of machine would be Rs 20000. Find out the amount of annual depreciation and the rate of depreciation; also pass the necessary journal entries for the first 2 years assuming accounts are closed on 31 st march each year.?
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On 1st April, 2017, Rama and Co. bought a machine for Rs 90000. It spent Rs6000 on its installation and Rs 4000 on carriage. Its life was estimated to be 8 years and scrap value of machine would be Rs 20000. Find out the amount of annual depreciation and the rate of depreciation; also pass the necessary journal entries for the first 2 years assuming accounts are closed on 31 st march each year.?
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On 1st April, 2017, Rama and Co. bought a machine for Rs 90000. It spent Rs6000 on its installation and Rs 4000 on carriage. Its life was estimated to be 8 years and scrap value of machine would be Rs 20000. Find out the amount of annual depreciation and the rate of depreciation; also pass the necessary journal entries for the first 2 years assuming accounts are closed on 31 st march each year.? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about On 1st April, 2017, Rama and Co. bought a machine for Rs 90000. It spent Rs6000 on its installation and Rs 4000 on carriage. Its life was estimated to be 8 years and scrap value of machine would be Rs 20000. Find out the amount of annual depreciation and the rate of depreciation; also pass the necessary journal entries for the first 2 years assuming accounts are closed on 31 st march each year.? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for On 1st April, 2017, Rama and Co. bought a machine for Rs 90000. It spent Rs6000 on its installation and Rs 4000 on carriage. Its life was estimated to be 8 years and scrap value of machine would be Rs 20000. Find out the amount of annual depreciation and the rate of depreciation; also pass the necessary journal entries for the first 2 years assuming accounts are closed on 31 st march each year.?.
On 1st April, 2017, Rama and Co. bought a machine for Rs 90000. It spent Rs6000 on its installation and Rs 4000 on carriage. Its life was estimated to be 8 years and scrap value of machine would be Rs 20000. Find out the amount of annual depreciation and the rate of depreciation; also pass the necessary journal entries for the first 2 years assuming accounts are closed on 31 st march each year.? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about On 1st April, 2017, Rama and Co. bought a machine for Rs 90000. It spent Rs6000 on its installation and Rs 4000 on carriage. Its life was estimated to be 8 years and scrap value of machine would be Rs 20000. Find out the amount of annual depreciation and the rate of depreciation; also pass the necessary journal entries for the first 2 years assuming accounts are closed on 31 st march each year.? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for On 1st April, 2017, Rama and Co. bought a machine for Rs 90000. It spent Rs6000 on its installation and Rs 4000 on carriage. Its life was estimated to be 8 years and scrap value of machine would be Rs 20000. Find out the amount of annual depreciation and the rate of depreciation; also pass the necessary journal entries for the first 2 years assuming accounts are closed on 31 st march each year.?.
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