Machinery Account

Calculation of Depreciation Expense
To calculate the depreciation expense for the printing machine, we will use the straight-line method. The formula for straight-line depreciation is:

Depreciation Expense = (Cost of Asset - Residual Value) / Useful Life

Given information:
Cost of the printing machine = $90,000
Depreciation rate = 10% per annum
Useful life = Not provided, assuming 10 years
Residual value = Not provided, assuming $0

Depreciation Expense = (90,000 - 0) / 10 = $9,000 per year

Journal Entries
1. On 1st January 2008, when the machine was acquired:
Machinery Account (Dr) $90,000
To Cash/Bank Account $90,000

2. Depreciation expense at the end of each year (31st December):
Depreciation Expense Account (Dr) $9,000
To Accumulated Depreciation Account $9,000

3. On 1st October 2010, when the machine was sold:
Cash/Bank Account (Dr) $45,000
To Machinery Account $90,000
To Accumulated Depreciation Account $27,000
To Profit/Loss on Sale of Machinery Account $18,000

Calculation of Accumulated Depreciation
Accumulated Depreciation is the total depreciation expense accumulated over the years. We can calculate it by multiplying the depreciation expense per year by the number of years.

Depreciation Expense per year = $9,000
Number of years = 2010 - 2008 + 1 = 3 years

Accumulated Depreciation = Depreciation Expense per year * Number of years
Accumulated Depreciation = $9,000 * 3 = $27,000

Explanation of Journal Entries
1. On 1st January 2008, when the machine was acquired:
- The Machinery account is debited with the cost of the machine, as it is an asset.
- The Cash/Bank account is credited as the payment is made.

2. Depreciation expense at the end of each year (31st December):
- The Depreciation Expense account is debited to record the annual depreciation expense.
- The Accumulated Depreciation account is credited to accumulate the total depreciation over the years.

3. On 1st October 2010, when the machine was sold:
- The Cash/Bank account is debited with the amount received from the sale.
- The Machinery account is credited with the original cost of the machine to remove it from the books.
- The Accumulated Depreciation account is credited to remove the accumulated depreciation.
- The Profit/Loss on Sale of Machinery account is credited with the difference between the sale amount and the net book value (original cost - accumulated depreciation).

Final Machinery Account

Date | Particulars | Amount (Dr) | Amount (Cr)
--------------------------------------------------------------------
1 Jan 2008 | Cash/Bank | $90,000 |
| Machinery | | $90,000
--------------------------------------------------------------------
31 Dec 2008 | Depreciation Expense | $9