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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

Grading Scheme:
a) Straight line method Calculations 10 Marks
b) Diminishing balance method 10 Marks
c) Calculation of Profit/Loss using a & b 3 +3 Marks
d) Formatting (Use of proper tables and titles) 4 Marks

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Replies to This Discussion

a) Straight line method

      Cost = Rs.2450000

      Residual value=1280000        

      Expected life= 5 years

 

    Depreciation = (2450000-1280000)/5

                           = 234000

          Particular

         Depreciation

    Written down value

Depreciation cost

 

              1170000

Dep. of 1st year

             234000

               936000

Dep. of 2nd year

             234000

               702000

Dep. of 3rd year

             234000

               468000

Dep. of 4th year

             234000

               234000

Dep. of 5th year

             234000

                    0


Book value= 0

       Sale prize = 1280000      

       Profit  =  (1280000 - 0)

                      = 1280000

B) Diminishing Balance Method

b)      Diminishing balance method

Particular

Deprecation (Rs.)

Accumulated Depreciation (Rs.)

Written down value (Rs.)

Deprecation cost

 

 

2,450,000

 

Dep. Of 1st year

2,450,000 * 10%

2,450,00

2,450,00

2,216,000

Dep. Of 2nd year

2216000 * 10%

2,205,00

4,655,00

1,984,500

Dep. Of  3rd year

1984500 * 10%

1,984,50

6,639,50

1,786,050

Dep. Of 4th  year

1786050 * 10%

1,786,05

8,425,55

1,607,445

Dep. Of  5th year

1607445 * 10%

1,607,445

1,003,299.5

1,446,700.5

 

Book value= 1,446,700.5

       Sale prize = 1280000      

       loss =  1,446,700.5- 1280000 

             =166700.5

this solution is 100% true.

We are very much confused between Mr. Tariq and Ash.

What is the right one? Please help

Yup Plz tell ..which one is true soution......

see 113 page

thnx

Assignment+Solution+2+MGT101

Attachments:

Assignment No 01 Solution

MC110200964

 

Cost of Machine                                   = 2,450,000.00

Rate of Depreciation                             = 10% p.a

Disposed off after 5 years                     = 1,280,000.00

Q No. 1          

Straight Line Method

Particulars

Depreciation (Rs)

Written Down Value (Rs)

Depreciable Cost

-

2,450,000

Depreciation of 1st Year

245000

2205000

Depreciation of 2nd Year

245000

1960000

Depreciation of 3rd Year

245000

1715000

Depreciation of 4th Year

245000

1470000

Depreciation of 5th Year

245000

1225000

 

Diminishing Balance Method

Particulars

Depreciation (Rs)

Accumulated Depreciation (Rs)

Written Down Value (Rs)

Depreciable Cost

-

-

2,450,000

Depreciation of 1st Year

245000

245000

2205000

Depreciation of 2nd Year

220500

465500

1984500

Depreciation of 3rd Year

198450

663950

1786050

Depreciation of 4th Year

178605

842555

1607445

Depreciation of 5th Year

160745

1003300

1446700

 

 

 

 

Q No. 2

A)        Profit or Loss under Straight Line Method

            Disposed off Machine Value after 5 years                     = 1,280,000.00

            Written Down Value                                                     = 1225000

            Profit                                                                            = 55000 Rs

B)        Profit or Loss under Diminishing Balance Method

            Disposed off Machine Value after 5 years                     = 1,280,000.00

            Written Down Value                                                     = 1446700

Loss                                                                             = 166700 Rs

a)      Straight line method

Cost of machine = 2,450,000

Depreciation rate = 10% p.a

Expected Life = 5 years

10% of 2,450,000 = 245000

Disposal Value (Residual Value) = 1,280,000

Ash you have written wrong WD values.

Here, is one may be it works.

Attachments:

mr navid ap baqi sab ka b Q galat karwa rahe ho mera solution thk hai agar ap ko problem ho rai hai to page no 113 pay daikh lain.WDV thk hain

thanks ash for the correct answer

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