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Journal entry of an old machine with the book value rupees 220000 is exchange for a new machine of rupees 500000.The old machine is valued rupees 75000 for exchange purpose by machine tools?
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Journal entry of an old machine with the book value rupees 220000 is e...
Introduction: The old machine with a book value of rupees 220000 has been exchanged for a new machine worth rupees 500000. The machine tools have valued the old machine at rupees 75000 for the exchange purpose.
Explanation: The exchange of an old machine for a new one is a common practice in the manufacturing industry. The book value of the old machine is the value of the asset as per the accounting records. However, the actual value of the asset may differ from the book value due to various reasons like wear and tear, obsolescence, etc.
In this case, the machine tools have valued the old machine at rupees 75000 for the exchange purpose. This means that the actual value of the old machine is less than its book value. The machine tools may have assessed the condition of the old machine and taken into consideration its age, maintenance, and market value to arrive at this valuation.
Implications: The exchange of an old machine for a new one has financial implications for the company. The old machine is a capital asset, and its disposal will affect the company's balance sheet and income statement.
The book value of the old machine will be removed from the balance sheet, and any gain or loss arising from the exchange will be recorded in the income statement. If the actual value of the old machine is less than its book value, a loss will be recorded in the income statement.
On the other hand, the new machine will be recorded as a capital asset on the balance sheet, and its cost will be depreciated over its useful life. The cost of the new machine will be reflected in the income statement as an expense over the years.
Conclusion: In conclusion, the exchange of an old machine for a new one has financial implications for the company. The valuation of the old machine by the machine tools at rupees 75000 for the exchange purpose indicates that its actual value is less than its book value. The company needs to be aware of the financial implications of the exchange and record the transaction correctly in its accounting records.
Explanation: The exchange of an old machine for a new one is a common practice in the manufacturing industry. The book value of the old machine is the value of the asset as per the accounting records. However, the actual value of the asset may differ from the book value due to various reasons like wear and tear, obsolescence, etc.
In this case, the machine tools have valued the old machine at rupees 75000 for the exchange purpose. This means that the actual value of the old machine is less than its book value. The machine tools may have assessed the condition of the old machine and taken into consideration its age, maintenance, and market value to arrive at this valuation.
Implications: The exchange of an old machine for a new one has financial implications for the company. The old machine is a capital asset, and its disposal will affect the company's balance sheet and income statement.
The book value of the old machine will be removed from the balance sheet, and any gain or loss arising from the exchange will be recorded in the income statement. If the actual value of the old machine is less than its book value, a loss will be recorded in the income statement.
On the other hand, the new machine will be recorded as a capital asset on the balance sheet, and its cost will be depreciated over its useful life. The cost of the new machine will be reflected in the income statement as an expense over the years.
Conclusion: In conclusion, the exchange of an old machine for a new one has financial implications for the company. The valuation of the old machine by the machine tools at rupees 75000 for the exchange purpose indicates that its actual value is less than its book value. The company needs to be aware of the financial implications of the exchange and record the transaction correctly in its accounting records.
Community Answer
Journal entry of an old machine with the book value rupees 220000 is e...
New machine a/c dr. 500000
PnL. a/c. dr. 145000
To old machine a/c 220000
To machine tools a/c 425000
PnL. a/c. dr. 145000
To old machine a/c 220000
To machine tools a/c 425000
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Journal entry of an old machine with the book value rupees 220000 is exchange for a new machine of rupees 500000.The old machine is valued rupees 75000 for exchange purpose by machine tools?
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Journal entry of an old machine with the book value rupees 220000 is exchange for a new machine of rupees 500000.The old machine is valued rupees 75000 for exchange purpose by machine tools? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Journal entry of an old machine with the book value rupees 220000 is exchange for a new machine of rupees 500000.The old machine is valued rupees 75000 for exchange purpose by machine tools? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Journal entry of an old machine with the book value rupees 220000 is exchange for a new machine of rupees 500000.The old machine is valued rupees 75000 for exchange purpose by machine tools?.
Journal entry of an old machine with the book value rupees 220000 is exchange for a new machine of rupees 500000.The old machine is valued rupees 75000 for exchange purpose by machine tools? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Journal entry of an old machine with the book value rupees 220000 is exchange for a new machine of rupees 500000.The old machine is valued rupees 75000 for exchange purpose by machine tools? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Journal entry of an old machine with the book value rupees 220000 is exchange for a new machine of rupees 500000.The old machine is valued rupees 75000 for exchange purpose by machine tools?.
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