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1 October machine purchased 40000 31 January 1/4 of machine sold 5600on same day machine purchase 15000prepare a/c 10% depreciation wdv?
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1 October machine purchased 40000 31 January 1/4 of machine sold 5600o...
It appears that you are asking for assistance in preparing an account for a machine that was purchased on October 1, with a portion of the machine sold on January 31, and an additional purchase made on the same day. The account should also reflect the depreciation expense for the machine using the declining balance method, with a 10% depreciation rate and a depreciation base of the written down value (WDV).
Here is an example of how the account could be prepared:
October 1: Machine purchased for 40000. Debit machine account for 40000. Credit cash or accounts payable for 40000.
January 31: 1/4 of machine sold for 5600. Debit cash or accounts receivable for 5600. Credit machine account for 5600.
January 31: Additional machine purchased for 15000. Debit machine account for 15000. Credit cash or accounts payable for 15000.
To calculate the depreciation expense for the machine, you will need to determine the WDV of the machine at the beginning of each period. The WDV is calculated by subtracting the accumulated depreciation from the original cost of the machine.
For example, if the machine has a useful life of 4 years and a 10% depreciation rate, the WDV at the end of the first year would be calculated as follows:
WDV at end of year 1 = Original cost - Depreciation expense
= 40000 - (40000 * 10% * 1/4)
= 40000 - 10000
= 30000
The WDV at the end of the second year would be calculated in the same way, using the WDV at the end of the first year as the starting point.
You will need to continue this process for each period until the end of the useful life of the machine, at which point the WDV will be equal to the residual value of the machine.
It is important to note that this is just one possible way to prepare the account, and the specific details and treatment of the transactions may vary depending on the accounting policies and procedures of the company.
This question is part of UPSC exam. View all Class 11 courses
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1 October machine purchased 40000 31 January 1/4 of machine sold 5600o...
Calculation of WDV (Written Down Value) of Machine:
To calculate the WDV (Written Down Value) of the machine, we need to consider the initial cost of the machine, the depreciation rate, and any subsequent purchases or sales of the machine.
Initial Cost of the Machine:
On 1 October, a machine was purchased for $40,000.
Purchase of Machine:
On 31 January, a quarter of the machine was sold for $5,600. On the same day, a new machine was purchased for $15,000.
Depreciation Rate:
The depreciation rate is given as 10%.
Calculation Steps:
1. Calculate the depreciation for the period from 1 October to 31 January:
Depreciation for 3 months = (10% / 12) * $40,000 = $333.33
2. Calculate the adjusted cost of the machine on 31 January:
Adjusted cost = Initial cost - Depreciation for the period = $40,000 - $333.33 = $39,666.67
3. Calculate the depreciation on the new machine purchased on 31 January:
Depreciation on new machine = 10% * $15,000 = $1,500
4. Calculate the total depreciation for the year:
Total depreciation = Depreciation for 3 months + Depreciation on new machine = $333.33 + $1,500 = $1,833.33
5. Calculate the WDV of the machine on 31 January:
WDV = Adjusted cost - Total depreciation = $39,666.67 - $1,833.33 = $37,833.34
Summary:
The written down value (WDV) of the machine on 31 January is $37,833.34. This value represents the net book value of the machine after accounting for the initial cost, depreciation, and any subsequent purchases or sales. Depreciation is a systematic allocation of the cost of an asset over its useful life, and it helps in determining the value of the asset at any given point in time. By calculating the WDV, we can assess the remaining value of the machine and make informed decisions regarding its replacement, repair, or disposal. This information is essential for financial reporting, tax purposes, and decision-making within an organization.
To calculate the WDV (Written Down Value) of the machine, we need to consider the initial cost of the machine, the depreciation rate, and any subsequent purchases or sales of the machine.
Initial Cost of the Machine:
On 1 October, a machine was purchased for $40,000.
Purchase of Machine:
On 31 January, a quarter of the machine was sold for $5,600. On the same day, a new machine was purchased for $15,000.
Depreciation Rate:
The depreciation rate is given as 10%.
Calculation Steps:
1. Calculate the depreciation for the period from 1 October to 31 January:
Depreciation for 3 months = (10% / 12) * $40,000 = $333.33
2. Calculate the adjusted cost of the machine on 31 January:
Adjusted cost = Initial cost - Depreciation for the period = $40,000 - $333.33 = $39,666.67
3. Calculate the depreciation on the new machine purchased on 31 January:
Depreciation on new machine = 10% * $15,000 = $1,500
4. Calculate the total depreciation for the year:
Total depreciation = Depreciation for 3 months + Depreciation on new machine = $333.33 + $1,500 = $1,833.33
5. Calculate the WDV of the machine on 31 January:
WDV = Adjusted cost - Total depreciation = $39,666.67 - $1,833.33 = $37,833.34
Summary:
The written down value (WDV) of the machine on 31 January is $37,833.34. This value represents the net book value of the machine after accounting for the initial cost, depreciation, and any subsequent purchases or sales. Depreciation is a systematic allocation of the cost of an asset over its useful life, and it helps in determining the value of the asset at any given point in time. By calculating the WDV, we can assess the remaining value of the machine and make informed decisions regarding its replacement, repair, or disposal. This information is essential for financial reporting, tax purposes, and decision-making within an organization.
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