Ittehad Silk Factory is engaged in the production of silk fabric of different ty
ID: 2385719 • Letter: I
Question
Ittehad Silk Factory is engaged in the production of silk fabric of different types. Mr. Sultan Ghani, one of the directors, bought latest embroidery machines for its newly established embroidery unit for Rs. 2,450,000/- on 1st January 2011. The company depreciates machinery @10% p.a. The machinery will be disposed off at the end of 5th year at Rs. 1,280,000/-. The accounts are closed on 31st December each year.Required:
1. Prepare the Fixed Asset Schedule regarding machinery showing the columns of Years, Cost, Depreciation charges, Accumulated depreciation and Written down value for five years using the following methods separately:
a) Straight line method
b) Diminishing balance method
2. Calculate the profit or loss on the disposal of machinery under:
a) Straight line method
b) Diminishing balance method
Explanation / Answer
Fixed Asset Schedule (Diminishing Balance Method) Date Cost Depreciation charges Accumulated depreciation Written down value 1.1.2011 2,450,000.00 31.12.2011 245000 245000 2,205,000.00 1.1.2012 2,205,000.00 31.12.2012 220500 465500 1,984,500.00 1.1.2013 1,984,500.00 31.12.2013 198450 663950 1,786,050.00 1.1.2014 1,786,050.00 31.12.2014 178605 842555 1,607,445.00 1.1.2015 1,607,445.00 31.12.2015 160744.5 1003299.5 1,446,700.50 Written down value at the end of the 5th year = 1446700.5 Disposal value = 1280000 Profit or Loss = 1280000-1446700.5 Loss = 166700.5 Fixed Asset Schedule (Straight line Method) Date Cost Depreciation charges Accumulated depreciation Written down value 1.1.2011 2,450,000.00 31.12.2011 490000 490000 1,960,000.00 1.1.2012 1,960,000.00 31.12.2012 490000 980000 1,470,000.00 1.1.2013 1,470,000.00 31.12.2013 490000 1470000 980,000.00 1.1.2014 980,000.00 31.12.2014 490000 1960000 490,000.00 1.1.2015 490,000.00 31.12.2015 490000 2450000 0.00 Written down value at the end of the 5th year = Nil Disposal value = 1280000 Profit or Loss = 1280000 Profit = 1280000
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.